• Home building still held back by coronavirus shutdowns last month.

• Building permit increase suggests improvement is coming.

New residential housing starts increased 4.3% during May (-23.2% y/y) to 974,000 (SAAR) from 934,000 in April, revised from 891,000. Total starts remain 38.6% below their January peak. The Action Economics Forecast Survey expected 1.100 million starts in May.

Starts of single-family homes were little-changed last month (-17.8% y/y) at 675,000 following a 23.4% April weakening. It stayed near a five-year low. Multi-family starts improved 15.0% (-33.1% y/y) to 299,000, following three consecutive sharp monthly declines.

A 14.4% increase (-8.8% y/y) in building permits to 1.220 million units followed a 21.4% April decline. Permits to build single-family homes improved 11.9% (-9.9% y/y) to 745,000 after falling 24.7% in April. Permits to build multi-family homes rose 18.8% (-7.0% y/y) and recovered April's shortfall.

By region, last month's improvement in housing starts reflected a 12.8% increase (-39.1% y/y) in the Northeast to 53,000. It followed sharp declines in each of the prior three months and were three-quarters below January. Starts in the West increased 69.8% to 309,000 and y/y weakness remained modest at -1.9%. In the Midwest, housing starts fell 1.5% (-15.8% y/y) to 133,000 after declining sharply during the prior two months. In the South, starts decreased 16.0% (-32.3% y/y) to 479,000, off 44.9% in just the last three months.

The housing starts and permits figures can be found in Haver's USECON database. The expectations figure is contained in the AS1REPNA database.

U.S. Economic Outlook and Monetary Policy from Fed Vice Chair Richard H. Clarida can be found here.