Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

U.S. Housing Starts, Building Permits Tumble in May as Higher Rates Hit

Published 06/16/2022, 08:34 AM
Updated 06/16/2022, 08:42 AM
© Reuters.

© Reuters.

By Geoffrey Smith 

Investing.com -- The U.S. housing market weakened again in May, with both building permits and housing starts falling by more than expected to their lowest level since last October.  

Housing starts fell 14.4% on the month to 1.549 million, while building permits fell by 7% to 1.695 million. Both numbers were markedly below consensus forecasts. 

The declines were biggest in those regions where the housing market had previously been hottest, the South and West, where housing starts fell 21% and 18% on the month respectively.

"So much for all those backlogs and all cash investors builders thought they had," said Diane Swonk, chief economist with Grant Thornton, via Twitter, noting that the number of projects being canceled had leaped due to higher interest rates wrecking the calculations of many builders and prospective home-owners. The Mortgage Bankers Association's benchmark 30-year mortgage rate rose to a new 14-year high of 5.65% last week and is now at its highest since the deflation of the subprime bubble in 2008.

Elsewhere, the Labor Department also reported signs that some of the froth may also be coming off the labor market, as initial jobless claims came in at 229,000, only just below an upwardly revised figure of 232,000 for the previous week. The four-week average for initial claims, which smooths out some short-term volatility in the series, rose to its highest since March, at 218,500.

The housing and the labor market have both been highlighted by the Federal Reserve as areas of conspicuous overheating in recent months, and various officials have stressed the importance of rate hikes for bringing them down. 

However, both the housing data and labor market data remain strong by any longer-term historical comparison, with housing supply, in particular, having responded rapidly during the pandemic to the big shift in demand in favor of larger properties further away from city centers. Even May's levels were more than 10% above anything seen in a single month before February 2020.

In a similar vein, the jobless claims figure conspicuously failed to tick up sharply despite a wave of layoffs announced by the technology sector over the last two weeks.

"Note that relatively few people are affected and that many never apply for jobless claims because they have 4 job interviews and a new job the week they’re laid off," Julia Pollak, chief economist with ZipRecruiter, said via Twitter.

Latest comments

last president of USA, will see massive massive fall in short time. Dow can reach23000 level fast.
If a still historically low 5% interest rate causes you to bot be able to buy a house then you shouldnt have been buying. Supply is going to dwindle more and we still have double the ppl trying to buy than in 2008 due to pop growth and half the supply. The fed is creating a disaster
People may be forced to sell houses.
that's how it is in a free country with uncontrolled capitalism controlling government corrupting it.
Buy gold
this is what was suppose to happen . why do these people act so surprised
Lgb
send more money to Ukraine who cates if Weare hopeless
Go kiss yout frirnd putin
We just did. Bye bye, Ruskies.
us funding war to save their highly illegal and unethical bio chemical labs in ukraine. I bet brad would be with 1940s Germany
Thanks FED ! Thanks Powell !! Great job !
At least you don't have to worry about inflation
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.