Builder confidence remains in the basement, but housing starts inched up by 3.5% in May to a seasonally adjusted annual rate of 560,000.
Building permits, which is a more forward looking indicator of new construction, rose by a more impressive 8.7% to 612,000 units, the highest in five months. Much of the lift, however, came from multi-family units, but single-family managed a 2.5% gain to 405,000.
On a relative basis, the overall news is encouraging as single-family permits, which offers us an early look at the new home market, has been up for three months in a row.
And despite the overall downward trend over the last year, permits have not returned to the bottom reached in early 2009.
Still, plenty of obstacles remain before a firm foundation is in place under the market.
Competition from distressed sales of late model homes, tight credit standards, difficulty in selling existing homes, fears that housing prices haven’t bottomed, weak job creation and the inability of those who have lost homes to qualify for a new home are all standing in the way of a stronger housing market.
So it shouldn’t come as a surprise that builders have yet to express any degree of optimism on the market.
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