April Housing Starts Stumble
Housing starts fell in April, HUD and the Census Bureau reported yesterday, exacerbating the debate over housing inventories in a rapidly heating housing market.
The report said privately owned housing starts in April fell to 1.172 million units, seasonally adjusted, 2.6 percent lower than March’s revised estimate of 1.203 million, but 0.7 percent higher than a year ago (1.164 million). Single-family housing starts in April fell by 0.4 percent to 835,000; the April rate for units in buildings with five units or more totaled 328,000 units, a 9.6 percent decline from March and a 14.6 percent drop from a year ago.
Regionally, results were mixed. Starts fell in the largest region, the South, declining by 9.1 percent to 592,000 units, seasonally adjusted, in April from 651,000 units in March and fell by 1.5 percent from a year ago. In the Northeast, starts fell by 29.2 percent to 79,000 units in April from 126,000 in March and fell by 34.2 percent from a year ago. In the West, starts rose by 5.4 percent in April to 295,000 units in April from 280,000 in March and improved by 23.4 percent from a year ago. In the Midwest, starts jumped by 41.1 percent to 206,000 units in April from 146,000 units in March and improved by 1.0 percent from a year ago.
Mark Fleming, chief economist with First American Financial Corp., Santa Ana, Calif., said the report signals further supply shortages in the housing market.
“The lack of inventory of homes for sale is one of the most pressing challenges in the housing market today, and new homes are the source of supply that increases the total stock of housing to meet our nation’s growing demand,” Fleming said. “Yet, many builders have noted the challenge of increasing production with constrained labor supply. Unlike many industries that are adopting automation, robotics and artificial intelligence, building a home does not easily lend itself to outsourcing and automation. Home building still requires manual labor as a key input into the production process. While the need for manual labor may be changing or declining in other industries, it’s very hard to build a home without construction workers.”
Ralph McLaughlin, chief economist with Trulia, San Francisco, said the new construction numbers “disappoint.”
“The silver lining for new homebuyers is that most of the construction pullback is in the multifamily sector, where economists have been expecting an eventual slowdown given the charge of multifamily units coming out of the recession,” McLaughlin said. “It looks like the retreat is finally here. The one number to note is the decline in single-family permits. We’ll be closely watching this closely in the coming months to see whether this is an anomaly or the start of a trend.”
Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said milder winter weather that supported homebuilding at the start of the year has made it more difficult for housing starts to post larger than usual gains this spring.
“Despite the disappointing print, housing starts for the first four months of the year are running 5.3 percent ahead of their year ago level and single-family starts are up a stronger 7.0 percent,” Vitner said. “The upward trend in single-family starts is consistent with yesterday’s strong homebuilder confidence report. We look for homebuilding to continue to trend higher.”
The report said privately owned housing units authorized by building permits in April came in at 1.229 million, 2.5 percent below March’s revised 1.260 million but 5.7 percent higher than a year ago. Single-family authorizations in April fell by 5.4 percent to 789,000; authorizations of units in buildings with five units or more totaled 403,000 in April, a 3.3 percent improvement from March but down by 17.3 percent from a year ago.
Privately owned housing completions in April fell by 8.6 percent to 1.106 million from March’s revised 1.210 million, but 15.1 percent higher than a year ago. Single-family housing completions in April fell by 4.5 percent to 784,000; the April rate for units in buildings with five units or more was 299,000, in April, a nearly 20 percent drop from 373,000 units in March but up by nearly 25 percent from a year ago.
