Due to the coronavirus pandemic and subsequent social distancing constraints, housing starts tumbled in April, falling 30.2% compared with March, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
Year-over year, housing starts were down 29.7% compared with April 2019.
It was the lowest starts rate since the first quarter of 2015.
In April, housing starts were at annual rate of 891,000, down from a revised annual rate of 1.276 million in March and down from 1.267 million in April 2019.
Starts of single-family housing homes were at an annual rate of 650,000, a decrease of 25.4% compared with a revised 871,000 in March.
Starts of multifamily homes (five units or more per building) were at an annual rate of 234,000, down 40.3% compared with a rate of 392,000 in March.
Building permits also fell. They were at an annual rate of 1.074 million, down 20.8% from a revised rate of 1.356 million the previous month and and down 19.2% from a rate of 1.330 million a year earlier.
Permits for single-family homes were at a rate of 669,000, down 24.3% compared with 884,000 in March.
Permits for multifamily dwellings were at a rate of 373,000 in April, a decrease of 12.4% compared with 426,000 in March.
“Despite today’s numbers, there is an undercurrent of long-term positivity in the housing market that will likely allow for a strong rebound,” says Dean Mon, chairman of the National Association of Home Builders (NAHB), in a statement. “Our builder confidence index has already shown signs of a turnaround. Housing was showing signs of momentum before the pandemic and is poised to lead the economic recovery as virus mitigation efforts take hold and more states take gradual steps to reopen.”
“While the April numbers were down, they were somewhat better than forecast and are expected to improve as more of the economy reopens,” adds Robert Dietz, chief economist for NAHB. “Single-family weakness was particularly seen in the West and Northeast as larger metro areas were under more economic pressure due to the lockdown phase. But as a sign of the strength housing had going into this downturn, single-family starts are still one percent higher on a year-to-date basis.”
Odeta Kushi, deputy chief economist for First American, also sees the potential for a housing market rebound.
“In April, the housing market data reflects the depth and severity of an economy put into a medically-induced coma,” Kushi says in a statement. “Housing starts data is no exception, as permits, starts, and completions fell by double digits relative to one year ago. Today’s numbers indicate less supply may be on the market to meet a late blooming home-buying season.
“Yet, there is a bright spot. Home builder confidence increased in May after April’s record-breaking decline, as builders responded to low mortgage rates and a rise in purchase applications indicating that potential home buyers are back in the market to buy,” Kushi adds. “Looking ahead, housing starts are a strong indicator of future demand because homebuilders are reluctant to break ground on new projects if they fear there will be no one there to buy it. All signs in the housing market are pointing to a rebound, and monitoring home builder activity will be key to gauging the recovery: if you’ll buy it, they will build it.”