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Housing starts fall flat in April

A hoped-for spring surge in homebuilding to relieve a worsening national housing shortage didn’t materialize in April, U.S. Census Bureau data suggests.

construct(1)Overall housing starts ran at an annualized pace of 1.28 million units, down 3.7 percent from the March level. Starts were up by 10.5 percent compared to a year earlier, however.

The monthly decline was entirely driven by a drop in multifamily construction. Multifamily starts clocked in at 374,000 units, down 13 percent over a strong March level.

Single-family starts, at 894,000 units annualized, were essentially flat compared with the March level. Year-over-year, single-family starts were up 7 percent.

Housing economists have more closely watched trends in single-family building, which has seen below-average building for several years. Single-family starts on an annualized basis have run at least 200,000 units below what is needed to meet housing demand, the National Association of Home Builders (NAHB) and other analysts have said.

Builders played down the monthly dip in building, noting that March’s production marked an 11-month high. Builder confidence in the market was also running high in May, suggesting that companies could ramp up this year. 

“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,” said NAHB chief economist Robert Dietz.

On the negative side of the ledger, homebuilders are also facing labor shortages, rising lumber costs and land constraints, he said. 

Only the South region saw an uptick in housing starts in April, compared with the March level. Year-over-year, homebuilding was up solidly in all regions except the Midwest, where overall starts in April were down by double digits compared with March and year over year.

“The drop [month over month] was broad based, as construction slowed in three out of the four regions in the U.S.,” said Sam Khater, chief economist for Freddie Mac. Relief appears to be coming where it is most needed, however, he said.

“On an April year-to-date basis, the supply-starved West region was by far the most vibrant, growing construction region, with a 28 percent increase in construction,” Khater said. 


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