WASHINGTON, DC - Home construction unexpectedly fell during April, brought down by a large decline in apartment groundbreakings that offset a modest gain in single-family housing starts. Single-family starts climbed 2.8% to 368,000, after rising 0.3% in March and remaining flat in February. Construction of housing with two or more units dropped 46.1% to 90,000; within that category, groundbreakings of homes with five or more units - or multifamily - were 42.2% lower.
Total housing starts dropped 12.8% to a seasonally adjusted 458,000 annual rate compared to the prior month, the Commerce Department said Tuesday. Starts fell 8.5% in April to 525,000; originally, Commerce reported April starts down 10.8% to 510,000.
Wall Street expected an increase in April construction. Economists surveyed by Dow Jones Newswires forecast a 2.0% increase to an annual rate of 520,000. Year over year, housing starts were 54.2% below the pace of construction in April 2008.
Despite the encouraging increase in single-family starts, the big overall drop was somewhat disappointing, given signs elsewhere of stabilization in the housing sector. New-home sales, for instance, are up from a January low. Builder confidence in the housing market is growing. The National Association of Home Builders' latest Housing Market Index rose to 16 in May, from 14 in April and nine in March.
But credit remains tight and the job market is very weak. The Labor Department reported 539,000 non-farm payroll jobs were lost in April. Payrolls fell by 699,000 in March. Since the recession began in December 2007, the U.S. has shed 5.7 million jobs. Also, inventories of new homes are high.
Tuesday's report on housing showed building permits in April decreased 3.3% to a 494,000 annual rate. Economists had expected permits to climb by 2.7% to a rate of 530,000. March permits fell 7.1% to 511,000.
Regionally, housing starts retreated 21.1% in the South, 30.6% in the Northeast, and 21.4% in the Midwest. Starts surged 42.5% in the West.
Nationwide, an estimated 41,300 houses were actually started in April, based on figures not seasonally adjusted. An estimated 46,000 building permits were issued last month, also based on unadjusted figures.
Source: WSJ.com