US: Housing Starts rise in April, still below last year’s level - Wells Fargo

Data released today in the US, showed that housing starts jumped in April, rising 5.7%. Analysts at Wells Fargo, point out that the pace of new residential construction has picked up alongside improving buying conditions, but they warn housing starts remain below last year’s level.

Key Quotes: 

“New residential construction finally appears to be improving against a backdrop of lower mortgage rates, strengthening new home sales and improving builder sentiment. Housing starts increased 5.7% during April to a 1.235 million-unit pace. Single-family starts rose a sturdy 6.2%, while multifamily starts increased 4.7% during the month. Revisions to prior months’ data were also positive on balance. Last month’s 0.3% drop in total starts was revised to show a 1.7% gain.” 

“Even with lower mortgage rates and better weather, homebuilding is struggling to regain traction. Year-to-date, both single-family and multifamily starts are running below last year’s levels, and total starts through April are 7.2% below the same period last year. Building activity topped out in early 2018, however, which means year-over-year comparisons will get easier going forward.”

“Building permits rose a more modest 0.6%. The overall number of permits issued is running well ahead of actual starts, especially in the multifamily segment.”

“The gain in housing starts mirrors recent improvements in builder sentiment. The NAHB Housing Market Index, a measure of builder confidence, rose three points in May to 66.”

“The overall index remains below last year’s level, but sentiment is clearly improving. Both the number of new completions and homes under construction fell again in April. When combined with the improving trend in sales, builders are quickly clearing any unwanted buildup in inventory accrued late last year.”