Apts. Dominate as Housing Starts Rise

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WASHINGTON, DC—April housing starts rose 20.2% nationwide from an upwardly revised March tally, according to Census Bureau data released Tuesday. New construction in the multifamily sector outshone single-family starts, with apartment builds up 27.2% from the previous month to a seasonally adjusted annual rate of 402,000 units, compared to a 16.7% increase for single-family.

The National Association of Home Builders cheered the results, pointing out that April’s seasonally adjusted annual rate of 1.135 million units represented the highest level of housing production since November 2007. However, David Crowe, chief economist at NAHB, says that although April’s gains ‘make up for the production dips we saw in the past two months,” single-family production is “still only about halfway back to what could be considered a normal market. With low interest rates and affordable home prices, we expect more upward momentum in the months ahead.”

Multifamily also dominated in April’s housing permits, according to the Census Bureau. The April total for permits came in at a seasonally adjusted annual rate of 1,143,000, up 10.1% from March and 6.4% from the year prior. Within that tally, single-family permits increased 3.7% from March while multifamily permits increased 20.5%.

On a regional basis, NAHB notes that combined single- and multifamily starts were up in three out of the four regions in April. The Northeast posted an increase of 85.9%, the Midwest rose 27.8% and the West increased 39%. Housing production dropped 1.8% in the South, a decline that IHS Global Insights attributes partly to a drop in the Baker-Hughes oil rig count.

In terms of permits, the Midwest was the only region to see a decline from March: 1.3%. The Northeast, South and West posted respective permit gains of 38.8%, 9.95 and 3%.

Calling April’s housing construction numbers “a good report,” IHS’ Patrick Newport andStephanie Karol says that although many of the month-on-month figures are “stunningly large,” the national permits and starts figures “all pass the sniff test” for statistical significance. “As demand for new construction picks up, builders have been facing more favorable credit conditions, according to the Fed Senior Loan Officers’ Survey,” write Newport and Karol, chief US economists at IHS.

Although some of the monthly spikes may be reversed in May’s Census Bureau report, “we believe the improvement in the housing market to be sustainable,” Newport and Karol write. “We expect housing starts to reach 1,184,000 by the end of 2015.”