The Census Bureau and the U.S. Department of Housing and Urban Development said that residential construction activity rebounded strongly in April. New housing starts jumped from an annualized 944,000 in March to 1,135,000 in April, its fastest pace since November 2007, the month before the start of the Great Recession. As such, it appears that the housing market has begun to move beyond the weather-related softness seen in some regions of the country in February and March. On a year-over-year basis, housing starts have risen 9.2 percent since April 2014.
Both single-family (up from 628,000 to 733,000) and multi-family (up from 316,000 to 402,000) housing starts were higher in April, which was encouraging. The single-family growth rates was the fastest since January 2008, with multi-family starts reaching a nine-month high.
The housing permits data were equally reassuring. Housing permits increased from 1,038,000 units at the annual rate to 1,143,000. This was the highest level since June 2008. Single-family permitting rose from 642,000 to 666,000 for the month; whereas, permits for multi-family units increased from 396,000 to 477,000.
Such data points give us comfort that residential construction is beginning to stabilize, with incremental movement in the right direction. Indeed, I have forecast housing starts of 1.16 million by the end of 2015, which is consistent with this report. Likewise, the Housing Market Index from the National Association of Home Builders (NAHB) and Wells Fargo, which was released yesterday, continues to suggest that home are positive in their outlook than negative. This is true despite a slight easing in sentiment, with the HMI down from 56 in April to 54 in May.
Chad Moutray is the chief economist, National Association of Manufacturers.
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