WASHINGTON, June 16 (Reuters) - - U.S. homebuilding fell for a third straight month in May to the lowest level in eight months as construction activity declined broadly, which could raise concerns that the housing market recovery was faltering.
Housing starts dropped 5.5 percent to a seasonally adjusted annual rate of 1.09 million units, the Commerce Department said on Friday. That was the lowest level since September 2016.
April’s sales pace was revised down to 1.16 million units from the previously reported 1.17 million units. Economists polled by Reuters had forecast groundbreaking activity rising to a rate of 1.22 million units last month.
Homebuilding fell 2.4 percent on a year-on-year basis. Single-family homebuilding, which accounts for the largest share of the residential housing market, decreased 3.9 percent to a pace of 794,000 units last month, also the lowest level in eight months. Since racing to a near 9-1/2-year high in
February, single-family home construction has lost momentum.
Economists blame the moderation on supply constraints rather than demand for housing, which remains underpinned by a strong labor market. The unemployment rate of 4.3 percent, which is a 16-year low, is gradually lifting wages for workers. While mortgage rates have risen, they remain low by historical standards.
A survey on Thursday showed a dip in homebuilder confidence in June, with homebuilders expressing frustration over ongoing shortages of skilled labor and building lots.
In May, single-family starts surged 12.5 percent in the Northeast and jumped 9.5 percent in the Midwest. But they tumbled 8.9 percent in the South and dropped 4.9 percent in the West.
Last month, starts for the volatile multi-family housing segment declined 9.7 percent to a rate of 298,000 units. Multi-family housing starts have now declined for five straight months.
With rental increases appearing to have leveled off after strong gains over the last few years, there is probably limited room for strong growth in the construction of multi-family homes.
Building permits last month fell 4.9 percent to a pace of 1.17 million units, the lowest level since April 2016. That suggests homebuilding could remain weak in the coming months.
Reporting by Lucia Mutikani; Editing by Paul Simao; Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters; Messaging: email@example.com