Amid surging layoffs in the real estate market, slumping homebuilder sentiment, soaring rates and plunging mortgage applications, it is no surprise that analysts expected a drop in Housing Starts and Permits in May (-1.8% MoM and -2.5% MoM respectively). Those numbers were destroyed as Housing Starts crashed 14.4% MoM and Permits plunged 7.0% MoM...
This is the biggest drop in housing starts since the economy was shutdown by the government in April 2020.
Starts have fallen to their lowest since April 2021 and Permits to their lowest since Sept 2021.
Breaking down the numbers we find the following composition for permits:
- Permits, single-family, down 5.5% SAAR and down 7.9% YoY
- Permits, multi-family, down 10.0% SAAR, up 19.8% Y/Y
The drop was even more pronounced in housing starts, where multi-family, or rental units, collapsed.
- Single-family starts -9.2% SAAR, and down 5.3% Y/Y
- Multi-family starts down 26.8% SAAR, and down 3.3% Y/Y
And given where homebuilder sentiment is going, we suspect permits (forward-looking) will only get worse...
And given the layoffs are already starting, we suspect the new home inventory won't get any help anytime soon as affordability crashes to multi-decade lows.