Housing starts plunged 14.4% month-over-month in May to a seasonally adjusted annual rate of 1.54 million, a 13-month low, the U.S. Census Bureau reported. Compared with May 2021, housing starts declined 3.5%.
The decline was largely due to higher construction costs and rising interest rates, the National Association of Home Builders said.
“As the market weakens due to cyclical factors, the long-term housing deficit will persist and continue to frustrate prospective renters and home buyers,” NAHB Chairman Jerry Konter said in a statement.
Regionally, compared with April, housing starts increased 14.6% in the Northeast and 1.9% in the Midwest. However, housing starts declined 20.7% in the South and 17.8% in the West.
Overall building permits dropped 7.0% from April to 1.69 million, a 0.2% increase compared with May 2021.
Total housing completions in May were at a seasonally adjusted annual rate of 1.46 million, a 9.1% boost compared with April and a 9.3% surge compared with May 2021.