U.S. housing starts likely to have bounced back in May

In April, the U.S. housing starts had dropped 2.6 percent to an annualized rate of 1.172 million units, coming in opposite to the consensus expectations of a modest rise. Multifamily starts dropped 9.2 percent, accounting for the headline’s entire decline, whereas single-family starts rose 0.4 percent. Multifamily construction is expected to decelerate amidst lessening demand and the onslaught of apartment completions that have swamped the market in recent years, noted Wells Fargo in a research report.

In spite of the dismaying figure, housing starts for the initial four months of 2017 are running 5.3 percent above their level seen year ago, while single-family starts are up 7 percent. The upward trend in the single-family starts is in line with solid readings for homebuilder confidence.

“We expect residential construction activity to bounce back in May, and look for the pace of housing starts to rise to a 1.207 million annualized rate”, added Wells Fargo.