ConDig (17-Jun-17).  Construction of new homes in the US crumbled for a third straight month in May, led by a drop in multifamily production.

Housing starts fell 5.5% in May from a month earlier to a seasonally adjusted annual rate of 1.092 million units compared with April’s downward revised estimate of 1.156 million units, according to latest figures from the Commerce Department.

The total was also down 2.4% on the same period last year when starts totaled 1.119 million units.

It comes as multifamily starts continued to tumble in May and posted a 9.8% decline to 284,000 from April’s downward-revised rate of 315,000. Multifamily starts were down 25.7% on the year-ago period.

Single-family starts fell 3.9% in May to 794,000 compared with April’s downward-revised rate of 826,000, but were up 8.5% on a year earlier.

Building permits, which are a sign of future activity, were 4.9% lower at 1.168 million last month compared with the revised April rate of 1.228 million. Permits were also 1.1% below May 2016’s rate of 1.178 million.

“Today’s report is consistent with builder sentiment in the housing market, indicating some weakness after a strong start to the year,” said Granger MacDonald, chairman of the National Association of Home Builders (NAHB).

“Ongoing job growth, rising demand and low mortgage rates should keep the single-family sector moving forward this year, even as builders deal with ongoing shortages of lots and labor.”

The US housing sector is experiencing a somewhat subdued second quarter so far as homebuilders continue to face headwinds caused by labor shortages and a lack of available lots, while higher lumber prices persist due to uncertainty surrounding the possible introduction of a tariff on Canadian softwood lumber.

A preliminary determination on antidumping duties on imports of Canadian softwood lumber is expected later this month.

“After a strong start for single-family building this year, recent months have recorded softer readings,” said NAHB chief economist Robert Dietz.

“However, on a year-to-date basis, single-family starts are up 7.2% as builders add inventory to the market.”