Housing Starts Down More Than Anticipated

Washington, DC, June 16, 2010--Housing starts fell more than expected in May to a five-month low, the Commerce Department said on Wednesday.

New home building dropped 10% to a seasonally adjusted annual rate of 593,000 units, the lowest level since December.

The percentage decline was the biggest in 14 months and April's housing starts were revised down to show a 3.9% increase from a previously reported 5.8% rise.

Analysts had expected housing starts to fall to 650,000 units. Compared to May last year, starts were up 7.8 percent.

New building permits dropped 5.9% to a 574,000-unit pace in May, the lowest in a year. That followed a 10.9% drop in April and compared to analysts' forecasts for a rise to 630,000 units.

Housing starts rose in March and April as new home construction was pushed forward to take advantage of a government tax credit for home buyers. Buyers had to sign contracts by April 30 to qualify for the tax credit.

Groundbreaking for single-family homes fell 17.2% to an annual rate of 468,000 units in May after a 5.6% increase in April.

The percentage decline in May was the largest since January 1991 and snapped four months of gains.

However, starts for the volatile multifamily segment surged 33% to a 125,000-unit annual pace.

Home completions fell 7.4% to a 687,000-unit pace.