We finally got some good news on housing. Housing starts rose 13.2 percent to a 1.072 million unit pace in April, following a 2.0 percent rise in March. Housing permits rose 8 percent to a 1.08 million unit pace.
Back on Track?
Housing starts bounced back faster than expected in April, with starts surging 13.2 percent and permits climbing 8.0 percent. The increase in starts was mostly concentrated in multi-family units, which saw starts surge 39.6 percent to a 423,000-unit pace. The increase reflects a jump in apartment development, as improving job growth, increased household formations, and continued strong demand from millenials show a greater preference to rent instead of own. Multi-family permits rose 19.5 percent in April, but, at a 478,000-unit pace, continue to run well ahead of starts and indicate that there is still plenty of apartment construction in the pipeline.
Strong demand for apartments is coming at the expense of single-family housing. Single-family starts increased by a more modest 0.8 percent, 649,000-unit pace in April, following a 9.3 percent rise in March. The more measured gain in single-family closely resembles the recent disappointing reports from the NAHB/Wells Fargo Home Builders Index and mortgage applications data from the Mortgage Bankers Association.
While demand for new single-family homes remains restrained, demand is improving. Starts through the first four months of this year are running 1.7 percent ahead of their year-ago pace, even after taking into account this year’s harsh winter weather. All of the growth has been in the West, where the economy is strong and inventories are particularly lean, and the South, which has seen demand improve considerably in Texas, Georgia, Florida middle Tennessee and the Carolinas over the past year. Construction is running slightly below its year-ago pace in the Northeast and Midwest, which were most adversely impacted by the harsh winter weather.
So is the housing recovery back on track? While we hope it is, it is still way too early to tell. Permits for new single-family homes are running considerably below starts. Single-family permits rose just 0.3 percent in April to a 602,000-unit pace, compared to a 649,000-unit pace for starts. Single-family permits have averaged a 601,000-unit pace during the past two months, compared to a 647,000-unit pace for starts. Both series bounced back from much lower levels in January and February, when the drag from bad weather was worse. Those lower levels of starts earlier this year are also negatively impacting single-family completions, which fell 2.4 percent in April, after being unchanged in March.
The slide in completions and lower level of single-family permits means the housing data may struggle for a few more months. Fewer completions mean completed inventories will remain low, which will continue to restrain new home sales. Moreover, with single-family permits running well below starts, housing starts may give back some of their recent gain.
Back on Track?
Housing starts bounced back faster than expected in April, with starts surging 13.2 percent and permits climbing 8.0 percent. The increase in starts was mostly concentrated in multi-family units, which saw starts surge 39.6 percent to a 423,000-unit pace. The increase reflects a jump in apartment development, as improving job growth, increased household formations, and continued strong demand from millenials show a greater preference to rent instead of own. Multi-family permits rose 19.5 percent in April, but, at a 478,000-unit pace, continue to run well ahead of starts and indicate that there is still plenty of apartment construction in the pipeline.
Strong demand for apartments is coming at the expense of single-family housing. Single-family starts increased by a more modest 0.8 percent, 649,000-unit pace in April, following a 9.3 percent rise in March. The more measured gain in single-family closely resembles the recent disappointing reports from the NAHB/Wells Fargo Home Builders Index and mortgage applications data from the Mortgage Bankers Association.
While demand for new single-family homes remains restrained, demand is improving. Starts through the first four months of this year are running 1.7 percent ahead of their year-ago pace, even after taking into account this year’s harsh winter weather. All of the growth has been in the West, where the economy is strong and inventories are particularly lean, and the South, which has seen demand improve considerably in Texas, Georgia, Florida middle Tennessee and the Carolinas over the past year. Construction is running slightly below its year-ago pace in the Northeast and Midwest, which were most adversely impacted by the harsh winter weather.
So is the housing recovery back on track? While we hope it is, it is still way too early to tell. Permits for new single-family homes are running considerably below starts. Single-family permits rose just 0.3 percent in April to a 602,000-unit pace, compared to a 649,000-unit pace for starts. Single-family permits have averaged a 601,000-unit pace during the past two months, compared to a 647,000-unit pace for starts. Both series bounced back from much lower levels in January and February, when the drag from bad weather was worse. Those lower levels of starts earlier this year are also negatively impacting single-family completions, which fell 2.4 percent in April, after being unchanged in March.
The slide in completions and lower level of single-family permits means the housing data may struggle for a few more months. Fewer completions mean completed inventories will remain low, which will continue to restrain new home sales. Moreover, with single-family permits running well below starts, housing starts may give back some of their recent gain.
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