Housing starts rose 6.6 percent in April from the month prior to a seasonally adjusted rate of 1.172 million units. Spring often leads to a rise in new construction, and while this rise is promising, it’s important to note it’s still 1.7 percent below the April 2015 rate of 1,192,000.
Single-family housing starts in April were at a rate of 778,000; this is 3.3 percent above the revised March figure of 753,000. The April rate for units in buildings with five units or more was 373,000.
“Housing starts have been notoriously volatile in recent months, but there are some encouraging figures in April’s report,” says Quicken Loans Vice President Bill Banfield. “Activity in the Midwest spiked after contributing to much of last month’s slowdown and nationwide building permits also rose, signaling positive momentum building in new home construction.”
Privately owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,116,000. This is 3.6 percent above the revised March rate of 1,077,000, but is 5.3 percent below the April 2015 estimate of Single-family authorizations in April were at a rate of 736,000; this is 1.5 percent above the revised March figure of 725,000. Authorizations of units in buildings with five units or more were at a rate of 348,000 in April.
“The key takeaways from the new construction data are that we did see a recovery in construction activity in April in line or better than expectations, but we are seeing a material decline in multi-family construction on a year-over-year basis,” says realtor.com® chief economist Jonathan Smoke. “This year’s increase of 21 percent is less than last year’s 36 percent but otherwise is the strongest April increase in 20 years.
“It remains highly likely that the less severe winter this year pulled forward more activity into February, leading to last month’s disappointing March. It is good to see that April reversed that temporary decline in total activity. However, the declining year-over-year trend in multi-family construction looks to be real and reflects caution by developers to maintain the historically high level of apartment and condominium construction. Since household formation is outpacing completions, a lower level of multi-family new construction activity will keep vacancies low and will likely maintain above-average increases in rents.”
For more information, visit www.hud.gov.