Housing Starts, Permits Fall More Than Forecast in May

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Residential Construction Ahead Of Housing Starts Data
Luke Sharrett/Bloomberg via Getty Images
By Lucia Mutikani

WASHINGTON -- U.S. housing starts and building permits fell more than expected in May, suggesting the housing recovery will likely remain slow for a while.

Groundbreaking for homes fell 6.5 percent to a seasonally adjusted annual pace of 1 million units, the Commerce Department said Tuesday.

March's starts were revised down to show a 12.7 percent increase instead of the previously reported 13.2 percent rise. Economists polled by Reuters had forecast starts slipping to a 1.03 million unit rate last month.

Housing is struggling to regain momentum after a run-up in mortgage rates and hefty increases in prices stifled demand. A shortage of properties has also weighed on the sector.

%VIRTUAL-article-sponsoredlinks%Groundbreaking for single-family homes, the largest part of the market, fell 5.9 percent in May to a 625,000 unit pace, while starts for the volatile multifamily homes segment decreased 7.6 percent to a 376,000 unit rate.

Federal Reserve Chair Janet Yellen said last month there was a risk a protracted housing slowdown could undermine the economy.

Permits to build homes declined 6.4 percent to a 991,000 unit pace in May, pulling back from the 1.06 million units touched in April. Economists had expected permits to fall to a 1.05 million unit pace.

Permits for single-family homes rose 3.7 percent to a 619,000 unit pace. They continue to lag groundbreaking, suggesting single-family starts could fall in the months ahead.

A survey Monday showed confidence among single-family home builders increased in June, but fell short of reaching the threshold considered favorable for building conditions.

Permits for multifamily housing tumbled 19.5 percent to a 372,000 unit pace.

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House Rich: Neighborhoods With the Biggest Price Jumps
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Housing Starts, Permits Fall More Than Forecast in May

Year-over-year gain: 21.5%

Median sale price, Jan. 2013: $224,450

Median sale price, Jan. 2014: $272,750

Residents enjoy hundreds of nearby hiking trails, as well as indoor culture at the Fine Arts Center and the Colorado Springs Philharmonic.

Year-over-year gain: 22%

Median sale price, Jan. 2013: $318,375

Median sale price, Jan. 2014: $388,500

This neighborhood, bounded by the Schuylkill River and 20th Street, and by South Street and Christian Street, was viewed as a slum in the 1970s, when Philadelphia's Redevelopment Authority took over abandoned properties.

Year-over-year gain: 24.2%

Median sale price, Jan. 2013: $516,450

Median sale price, Jan. 2014: $641,500

Magnolia covers 4 square miles, making it the second-largest Seattle neighborhood by area. It features a lighthouse built in 1881 and is home to Seattle's largest park, at 534 acres.

Year-over-year gain: 32.1%

Median sale price, Jan. 2013: $210,446

Median sale price, Jan. 2014: $277,898

Paradise Valley, in the heart of the Scottsdale-Phoenix area, gets an average 294 days of sunshine a year -- hence, the more than 200 golf courses.

Year-over-year gain: 32.2%

Median sale price, Jan. 2013: $344,750

Median sale price, Jan. 2014: $455,835

The Washington Post listed Sunset Hills among "the shortest commute" category of Virginia neighborhoods, with an average commute time of just over 21 minutes. And Dulles International Airport is about six miles away.

Year-over-year gain: 44.5%

Median sale price, Jan. 2013: $247,735

Median sale price, Jan. 2014: $357,900

This once-seedy area has become hot in recent years. It's packed with art galleries and chic retail shops, as well as new upscale bars and restaurants next to venerable family-owned cafeterias.

Year-over-year gain: 46.9%

Median sale price, Jan. 2013: $284,750

Median sale price, Jan. 2014: $418,250

Brighton, once the center of New England's cattle trade, is in the northwest corner of Boston, on the Charles River. The Brighton Branch Library is Boston's first renovated LEED Green Building. The Brighton Police station is shown here.

Year-over-year gain: 47.5%

Median sale price, Jan. 2013: $223,175

Median sale price, Jan. 2014: $329,100

South Loop joins a number of other once-blighted neighborhoods on this list that have been redeveloped and are now hot. The site of former rail yards, it was known for many years more for its vices (as in brothels, burlesques) than its residential virtues.

Year-over-year gain: 48.7%

Median sale price, Jan. 2013: $241,000

Median sale price, Jan. 2014: $358,450

Also: Fairgrounds, San Jose (41.4%); La Jolla, San Diego (40%); Woodland Hills, Los Angeles (37.5%); Southwest Anaheim, Anaheim (35.2%); Berryessa, San Jose (34.4%).

Newhall, the southernmost and oldest district of Santa Clarita, was the first permanent Anglo settlement in the valley. Ranches-turned-film studios dot the area, including the Melody Ranch, which was once owned by Gene Autry. The ranch hosts the annual Santa Clarita Cowboy Festival.

Year-over-year gain: 48.8%

Median sale price, Jan. 2013: $504,250

Median sale price, Jan. 2014: $750,275

This is the most affluent neighborhood in Charlotte; the median income is $79,737, according to Zillow. That compares with a median of $46,975 for Charlotte. A high point of the area is the Duke Mansion, built in 1915 by tobacco magnate James Buchanan Duke.

Year-over-year gain: 57.4%

Median sale price, Jan. 2013: $167,450

Median sale price, Jan. 2014: $263,615

People who live here, according to classifications Zillow uses to characterize residents, are likely to be: Corporate Climbers, Multi-lingual Urbanites or in a category called "Bright Lights, Big City," which Zillow uses to describe "singles ranging in age from the early 20s to mid-40s who have moved to an urban setting."

Year-over-year gain: 97.3%

Median sale price, Jan. 2013: $668,250

Median sale price, Jan. 2014: $1,318,301

New York City’s 92-acre planned community includes areas built on more than 3 million cubic yards of soil and rock, some of which was excavated during the construction of the World Trade Center.

Bloomberg ranked neighborhoods in U.S. cities based on the year-over-year increase in median home sale prices from January 2013 to January 2014. Percentage increases were based on Zillow calculations of median sale prices of all home types and calculated only for neighborhoods with at least 10 sales per month. Only neighborhoods with median home sale prices of at least $250,000 in January 2014 were included. Data were rounded.

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