Housing starts, led by strong gains in multi-family construction in the Midwest and West, rose 8.2% in April from March levels to a seasonally adjusted annual rate of 1,032,000, the Commerce Department reported Friday. Starts, however, remained 30.6% below April 2007.
Single-family starts were down 1.7% from March to a rate of 692,000.
Building permits also were up 4.9% from March to April at an annual rate of 978,000, but they also remained well below (-34.3%) April 2007. Single family permits rose 4% to 646,000.
Completions in April were down 16% from March to a seasonally adjusted annual rate of 1,000,000, 34.9% below a year ago. Single-family completions in April were down 13% to 792,000.
Regionally, starts were down 12.7% in the Northeast, with single-family falling 7.2%; up 24.4% in the Midwest, with single-family up 5%; up 3.6% in the South, with single-family down 6.6%; and up 18.5% in the West, with single-family up 8.3%. Compared to this time last year, starts in the Northeast were down 45.4% overall and 38.5% in single-family in the Northeast; down 23.7% and 40.1% in the Midwest, respectively; down 29.5% and 42.9% in the South; and down 30.1% and 43.3% in the West.
Permits in April were down 1.8% overall and flat with March for single-family in the Northeast; up 27% overall and up 18.3% respectively in the Midwest; down 1.8% overall but up 1.2% in the South; and up 11.9% and 3.1% in the West. Year over year, permits in April were down 32.7% and 32.6% respectively in the Northeast; down 29.2% and 34.1% in the Midwest; down 32.9% and 38.2% in the South' and down 41% and 50.2% in the West.
The increases in starts and permits, although they were driven by multi-family, still surprised analysts. Carl Reichardt, home building analyst at Wachovia Securities, said in a research note that improved weather in April versus March contributed to the spurt in building activity.
However, Reichart wrote, "Additional capacity is not healthy for an industry with significant year-over-year declines in orders and weak sentiment as evidenced by recent operating results reported by public builders and yesterday's HMI (Housing Market Index) report which showed that builder sentiment remained at trough levels."
Michael Rehaut, home building analyst at J.P. Morgan, said the jump in starts "was entirely due to the volatile multi-family segment." He wrote, "While single-family permits also rose, up 4.0% sequentially, we do not believe this to be sustainable, given the current state of the market--weak demand and high elevated inventory levels--which we expect to continue." He concluded, "We believe the continued drop in starts reinforces our view that a trough in housing has yet to emerge."