Housing Starts in U.S. Surge to Seven-Year High
Friday, May 22, 2015
By Sho Chandra for Bloomberg
New residential construction in the U.S. surged in April to the highest level in more than seven years, indicating the industry has moved beyond a weather-related soft patch to regain strength.
Housing starts jumped 20.2 percent to a 1.14 million annualized rate, the most since November 2007, from a 944,000 pace in March, a Commerce Department report showed Tuesday in Washington. The median forecast of 83 economists surveyed by Bloomberg was 1.02 million. More permits, a proxy for future construction, were issued than at any time since June 2008.
An improving labor market and mortgage costs close to multiyear lows are reviving residential construction, a sign that the weakness in early 2015 was probably due to harsh winter weather. Builders including PulteGroup have said the spring selling season is off to a good start, and sentiment data for May showed developers are optimistic about the next six months.
“Housing demand is clearly picking up,” said David Sloan, a senior economist at 4Cast in New York, whose estimate for the level of starts was the closest in the Bloomberg survey. “Housing should show quite strong momentum over the next few quarters. Permits also suggest solid underlying demand.”
In other good news for housing, Home Depot posted first-quarter profit that topped analysts’ estimates during the retailer’s most important selling season. Rising property prices and the early arrival of warm weather spurred Americans to work on their homes’ exteriors. The spring is Home Depot’s biggest revenue generator -- even more important than Christmas.
Estimates for housing starts in the Bloomberg survey of economists ranged from 955,000 to 1.2 million. The prior month’s pace was previously reported as 926,000.
Last month’s 20.2 percent jump in starts was the biggest since February 1991. Construction slumped 16.7 percent in February as harsh weather prevent developers from starting new projects.
The surge in housing starts last month was paced by single-family projects in the West and multifamily in the Northeast, pointing to broad-based gains in the industry.
Construction of single-family houses in all the U.S. jumped 16.7 percent to a 733,000 rate, the most since January 2008.
Work on multifamily homes, such as townhouses and apartment buildings, climbed 27.2 percent to an annual rate of 402,000.
Three of four regions showed gains, led by the Northeast and West. The South was the only area with a decline.
