Housing starts dip in May; Construction activity slowest since 1991
* Overall housing starts came in at a seasonally adjusted annual rate of 975,000 million last month, down 3.3% from 1.008 million in April (previously reported as 1.032 million). Starts were down 32.1% from 1.436 million in May 2007 and slightly below forecasts for a reading of 980,000.
* Building permit issuance fell 1.3% to 969,000 units from 982,000 in April. That's also down 36.3% from the year-earlier reading of 1.522 million and slightly above forecasts for a number of 960,000.
* Breaking it down by property type, single-family starts dipped 1% to 674,000. Multifamily starts dropped 8% to 301,000. Single-family permitting activity dropped 4% to 623,000, while multifamily permitting gained 3.9% to 346,000.
* Regionally, starts surged 61.5% in the Northeast. But they dipped 4.4% in the South, slumped 10.3% in the West, and dropped 25% in the Midwest. Permits rose 30.6% in the Northeast and 4.1% in the West, but slipped 7.6% in the Midwest and 8.6% in the South.
The construction slump continued into May. Overall starts haven't been this weak since March 1991 (921,000). More telling: Excluding one month (January 1991 -- 604,000), single-family construction hasn't been this slow going all the way back to August 1982 (654,000).
Builders are cutting back sharply for several reasons: They're trying to reduce the overhang of inventory on their books. They're facing a much-lower level of housing demand. And they're being forced to compete for buyers with distressed sellers and lenders who are loaded down with foreclosures. Construction activity will remain muted until more inventory is worked off and the demand for housing starts rebounding. That's going to take some time, with a noticeable improvement not likely until later in 2009.