With housing inventories at recent highs, the US housing market just suffered another sentiment setback as Housing Starts crashed by 15.4% MoM in May (far worse than 2% drop expected and worse since March 2024)), following a revised 8.5% MoM drop in April. Building Permits slipped 0.7% MoM (in line with expectations)…

Source: Bloomberg

That pulls the Housing Starts SAAR to its lowest since COVID (after reaching the highest since 2024 in April)…

Source: Bloomberg

Under the hood, it was multi-family (rental) starts that collapsed:

Housing Starts single-family drop from 899K (revised lower from 930K) to 882K

Housing Starts multi-family drop from 486K (revised lower from 529K) to 284K

Source: Bloomberg

Did ‘renter nation’ just die?

Multifamily permits also fell…

Housing Permits single-family rise from 881K (revised higher from 872K) to 886K

Housing Permits multi-family drop from 491K (revised lower from 514K) to 474K

Is homebuilder sentiment about to slump even further…

Source: Bloomberg

It seems recent rises in the mortgage rate (and inventories already at over-stuffed levels, given the slowness of sales) has finally dented the homebuilders’ self-satisfying confidence.