Housing Starts Jump in April
Builders picked up the building pace in April as the industry streaked past analyst estimates for new home starts. Led mainly by the development of multi-family projects builders showed that they exist to do one thing - build. While the country still faces a massive glut in properties builders are placing their bets in lower-cost multi-family units. As deep discounts and incentives seem yet to stem the tide of single-family malaise home builders are looking for other ways to keep the revenue streams to at least a trickle.
From Market Watch on the housing start up-tick:
U.S. home builders broke ground on 8.2% more homes in April, led by a 36% increase in multi-family units, the Commerce Department estimated Friday. Housing starts rose to a seasonally adjusted annual rate of 1.032 million, far more than the 954,000 estimated for March or the 939,000 expected by economists. Starts of single-family homes declined for the 12th straight month, falling 1.7% to a seasonally adjusted annual rate of 692,000, the lowest since January 1991. Building permits increased 4.9% in April to a seasonally adjusted annual rate of 978,000.
The single-family home starts were the lowest in 17 years.
While builders are still building they’re not necessarily confident in the market, as incentives and deep discounts have yet to correct the downward trend of single family homes.
More from Bloomberg on the housing market doldrums:
Lower prices and other incentives have yet to revive demand for houses, indicating builders will need to come up with even more discounts to attract buyers. Stricter lending rules, job losses and growing pessimism about the economy signal sales will not rebound quickly.
“The trends are horrific,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York, who had the closest housing-starts estimate in Bloomberg’s survey. “There’s just no reason things are getting any better. Why would you buy a house? Why would you spend money to buy a depreciating asset?”
Starts increased in three of four regions, led by a 24 percent jump in the Midwest. Construction rose 19 percent in the West and 3.6 percent in the South. Starts dropped 13 percent in the Northeast.
Residential construction has subtracted from economic growth since the first three months of 2006, culminating in a 27 percent drop at an annual rate in the first quarter. That was the biggest decline since 1981.