Washington, DC, June 16--Home-building activity declined moderately in May as rising mortgage rates began impacting the red-hot housing sector.
The Commerce Department said housing starts last month fell 0.7% to a seasonally-adjusted 1.967 million annual rate, following a revised decline of 1% in April to a 1.981 million rate. April starts were previously reported as falling 2.1% to a 1.969 million annual rate. Economists had forecast a May decline of 1% to a 1.950 million annual rate.
While starts have fallen over the past two months, they remain at historically high levels -- hovering at an annual rate of just under two million. Most analysts expect rising mortgage rates to cool demand later this year. Last week, 30-year mortgage rates averaged 6.30%, up from 5.20% the same time a year ago.
Building permits, an indicator of future activity, unexpectedly rose by 3.5% to a 2.077 million annual rate. Single-family starts rose by 1.4% while multi-family starts, or starts on apartment buildings, plunged by 15.8%.
Starts fell in all regions except the West, where they rose by 28.9%. New home construction declined by 3.3% in the Northeast, 8.2% in the Midwest and 10.8% in the South.
May housing starts were up by 12.5% over the last 12 months.
An estimated 185,700 houses were actually started, based on unseasonally-adjusted figures. An estimated 182,900 building permits were issued in May, also based on unadjusted figures.
March housing starts were revised downward to a 5.5% increase to an annual rate of 2.000 million. March starts were last estimated as a 6.1% rise to a 2.011 million annual rate.
