Housing Still Down, But There Was Some Positive Growth in May

By at 17 June, 2020, 2:04 pm

by Raymond J. Keating-

According to the latest U.S. Census Bureau “Monthly New Residential Construction” report, building permits in May were up 14.4 percent compared to April, and housing starts rose by 4.3 percent. Before anyone gets too excited, however, these numbers merely reflect minor, one-month growth given the declines in February, March and especially April.

At seasonally adjusted annual rates, building permits had declined by 6.4 percent in February, 5.7 percent in March, and 21.4 percent in April – only to then increase by 14.4 percent in May. The May 2020 level was down by 8.8 percent compared to a year earlier.

Source: Federal Reserve Bank of St. Louis, FRED

Meanwhile, housing starts growth of 4.3 percent in May must be placed in the context of declines of 3.1 percent in February, 19 percent in March, and  26.4 percent in April. Compared to a year earlier, May’s housing starts were off by 23.2 percent.

Source: Federal Reserve Bank of St. Louis, FRED

More so than other sectors of our economy, housing is dominated by small businesses, for example, with 97.5 percent of employer firms having fewer than 20 employees. For good measure, housing might have a deeper hole to climb out of than many other sectors. But perhaps the latest housing data indicate that the process of recovery at least began in May.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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