After a slugging winter, housing starts have jumped a whopping 20.2 percent in April, restoring themselves to what some are calling “recovery highs,” levels similar to November 2007. Housing start landed at a 1.14 million annualized rates, up from a 944,000 pace in March, the highest it has been in 7 years, according to a Commerce Department report released May 19.
The 20.2 percent hop itself was the biggest jump recorded since February 1991. More permits—a measure point for future construction– were issued in April than at any time since June 2008.
“Inventory has been an anchor in the sand holding back housing for quite some time,” says Quicken Loans Vice President Bill Banfield. “While these reports are sometimes prone to revisions, a significant uptick in new home construction could help many buyers looking for a home in the coming months, from the trade-up buyer to those looking to purchase their first home.”
As the labor market perks up and mortgage costs move lower, residential construction is back in action, suggesting that the early 2015 slump was due to chilly winter weather.
But the increases, particularly in the single-family market, are also indicative of the continued healing taking place. Home buyers have been reluctant to buy until there is a clear sign that the economy, and more particularly their own future, is more positive. As employment grows and some wages increase and as home equity improves, some of those households break out of their concerns and are beginning to shop for a new home.
Permits were also up suggesting the positive trend will continue. Total permits rose 10.1% to 1.143 million units, the highest since December 2007. Single-family permits were up 3.7% from March to 666,000 and multifamily permits totaled 477,000 the highest since April 2006. Apartment construction continues to grow as most newly formed households are turning to renting.
Single-family starts increased in all regions and multifamily starts increased in the West and Northeast and were virtually unchanged in the Midwest. Multifamily starts were down 20% in the South. Single-family permits were up in every region and multifamily permits were up in the Northeast and South and virtually unchanged in the West. Multifamily permits were down 6% in the Midwest.