Construction activity was tempered somewhat during May as the pace of multi-unit starts pulled-back from a strong April, while single family home starts also eased. The annualized pace of starts fell by 6.5% to 1.001 million units during May missing a forecast softening to 1.030 million.

Construction of single-family homes fell to its lowest since February despite improving weather conditions and a pick-up in construction employment. Starts fell most in the Northeast, the nation’s most expensive region, declining from a pace of 127,000 to 95,000 units.

Starts of single family units only rose in the South. While the report is somewhat disappointing, it must be pointed out that activity remains exactly around the 1mm mark, which is a considerable improvement from the darkest days of the housing market’s demise.

Yet the pace at the peak was around two-times its current pace, and from that perspective there is a long way to go. One area of weakness that will require close attention going forward is the latest slippage in building permits.

Construction permits tumbled to a 991,000 annualized pace and to the fewest since January. While permits to build single family homes rose in all regions by an average of 3.7%, the major slippage was among the multi-unit sector where permits slumped by 19.5%.
 

Chart – US Housing starts and single family units