Housing Starts Dipped 3.7% in April, But Were Up 10.5% Compared with Last Year

Housing starts in April were at a seasonally adjusted annual rate of 1.287 million, a decrease of 3.7% compared with a revised 1.336 million in March, but an increase of 10.5% compared with 1.165 million in April 2017, according to estimates from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.

Starts of single-family homes were at a rate of about 894,000, an increase of 0.1% compared with a revised 893,000 in March and an increase of 7.2% compared with 893,000 in April 2017.

Starts of multifamily homes (five units or more per building) were at a rate of about 374,000, a decrease of 12.6% compared with 428,000 in March but an increase of 19.1% compared with April 2017.

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Regionally, combined single- and multifamily housing production increased 6.4% in the South, however, starts fell 8.1% in the Northeast, 12% in the West and 16.3% in the Midwest.

The month-over-month decrease in total housing starts follows an increase of 1.9% in March.

Building permits in April were at a seasonally adjusted annual rate of 1.352 million, a decrease of 1.8% compared with a revised 1.377 million in March but an increase of 7.7% compared with 1.255 million a year earlier.

Permits for single-family homes were at a rate of 859,000, an increase of 0.9% compared with a revised 851,000 in March.

Permits for multifamily homes were at a rate of 450,000, a decrease of 7.4% compared with 486,000 in March.

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“The annual increase in permits, housing starts and completions sends an optimistic message for the housing market as it signals some relief for the housing shortage,” says Mark Fleming, chief economist for First American, in a statement. “Based on the less volatile three-month moving average, the volume of total residential (single- and multi-family) housing starts is 14,000 less than March 2018 and 96,000 units higher than a year ago.”

“Housing starts are an important source of future supply and, as we have previously discussed in our Real House Price Index, the housing market is facing a supply constraint problem,” Fleming adds.

Randy Noel, chairman of the National Association of Home Builders (NAHB), says his organization had anticipated “some pullback” for housing starts in April “after such a strong March report.” He points out that despite the month-over-month dip, “housing starts remain at very healthy levels” and are much higher compared with 217.

“With homeownership rates on the rise, demand for single-family homes should continue to spur production in the months ahead,” Noel says in a statement.

Robert Dietz, chief economist for NAHB, points out that single-family starts “are up 8.3 percent for the first four months of the year relative to the start of 2017, which is higher than our forecast and bodes well for the rest of the year.”

“However, builders must manage supply-side hurdles, such as ongoing building material price increases and shortages of land and labor, to meet growing housing demand,” Dietz adds. “Lumber prices continue to rise, with recent increases adding more than $7,000 to the price of an average single-family home.”

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