As was the case with April’s new home sales report, today’s
New Residential Construction Report published jointly by the
U.S. Census Bureau and the
Department of Housing and Urban Development, if digested with additional scrutiny may result in a less optimistic outlook than was widely reported.
Key points:
- Authorized building permits were down 2.1% from April and 8.5% below the May 2005 figure.
- New home starts jumped up 5.0% but is still 3.8% below the May 2005 figure.
- By itself, single family home starts were up only 2.1% but are still 7.6% below the May 2005 figure.
Additionally, home builders have reported that they have been experiencing as much as a 20% drop off in new orders as well as a whopping 60% increase in cancellations.
The most important point here is that the Residential Construction report does NOT account for cancellations. Neither the Census Bureau nor HUD collects data on new home cancellations.
So what we may be seeing here is a short term discrepancy between the standard reported numbers and the actual completed new homes. Only time will tell if cancellations as well as mounting inventories will bring the month over month new home numbers back down in line with the obvious trend of a slowing housing market.
As was the case with April’s new home sales report, today’s New Residential Construction Report published jointly by the U.S. Census Bureau and the Department of Housing and Urban Development, if digested with additional scrutiny may result in a less optimistic outlook than was widely reported. 
