New Housing Starts in May Bottom Out, Reversing Much of April’s Gain

New housing starts in the U.S. fell 11.1 percent in May after big gains in the month of April, the Commerce Department said in a report Tuesday. However, permits for future construction hit a near eight-year high, increasing 11.8 percent to a 1.28 million-unit rate, or the highest since August 2007.

April starts were revised up to a 1.17 million-unit rate, which is the highest since November 2007.

Economists polled by Reuters had forecast housing starts falling to a 1.10 million-unit pace in May after a previously reported 1.14 million-unit rate.

Meanwhile, permits have been above a 1 million-unit pace since July.

Groundbreaking for single-family homes, which accounts for the largest share of the market, dropped 5.4 percent to a 680,000 unit pace. Starts for the volatile multifamily segment plummeted 20.2 percent to a 356,000 unit rate.

The decline was prevalent in all four regions, declining by a whopping 26.5 percent in the Northeast. Starts in the South, where most of the home building takes place, fell 5.0 percent.

Single-family building permits inched up 2.6 percent to their highest level since December. Multi-family building permits increased by a hefty 24.9 percent. Permits for buildings with five units or more increased to their highest level since January 1990.