WASHINGTON — Home construction fell in May as housing starts dropped 10% to a seasonally adjusted annual rate of 593,000 units and building permits fell 5.9% to 574,000, the Commerce Department reported yesterday.
The decline was driven by the demise of home buyer tax credits, which expired in April, and a glut of homes for sale. The credit provided home buyers with tax breaks worth as much as $8,000.
The May level of building permits was the lowest in a year. Permits have fallen three straight months from a 2010 high of 685,000 in March. The country’s four geographical regions all saw building permits decline. Single-family building permits fell 9.9% to 438,000, the lowest level since May 2009.
Housing starts declined to their lowest level since December. Single-family housing starts fell by 17.2%, the largest percent decline since 1991.
Economists polled by Thomson Reuters expected 650,000 housing starts and 625,000 building permits, according to the median estimate.
Total housing starts for April were revised lower to 659,000 from 672,000. Total building permits for April were revised higher to 610,000 from 606,000.
The May inventory of new residential properties under construction fell to a record low of 475,000 from 486,000 in April. The data go back to 1970.
For the 12 months ending in May, housing starts increased 7.8% and building permits rose 4.4%.