Construction starts on single-family homes dropped 6.4% from April to May, according to a report from the U.S. Department of Commerce. This drop was offset in the industry by a 10.9% increase in the construction of apartments, marking a total overall decline of 0.9%. Applications for building permits increased (barely) in the same time period by 0.3%.
“Residential construction has been a drag on the economy over the past year but economists are forecasting that it will turn around in the coming months with home construction boosting growth in the second half of this year and into next year, spurred by falling mortgage rates,” reports Martin Crutsinger for the Associated Press.
The drop in single-family home construction was quickly followed by the U.S. home builder confidence index falling two points to 64 in June, as tracked by the National Association of Home Builders. While this is not an overly alarming development (any index score over 50 is “good”), that number is slightly concerning due to the fact that the confidence index was forecast to rise a point in May.
The Commerce Department’s May construction report showed that construction starts were down across the country, including a dramatic 45.5% decline in the Northeast. Construction starts rose in only one region, the South, where overall building starts were up a healthy 11.2%.
While these conditions are fairly typical of the construction industry, it is important to pay attention to any and all warning signs as the U.S. economy faces a potential recession in the coming years.
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