Housing starts in the U.S. dropped in April after rising in March. Housing starts dropped 3.7 percent to 1.287 million units. Permits also dropped, but to a lesser degree, but 1.8 percent. The fall in headline starts was driven by the volatile multi-family component, which fell 11.3 percent. April marks the fourth month in a row of double-digit moves in multi-family housing starts. On a sequential basis, multi-family starts continued to be solid after a period of softness in mid-2017, and rose 19 percent year-on-year.
Single family starts came in flat mostly, rising 0.1 percent. However, much like multi-family starts, still show a stable upward trend, rising 7 percent year-on-year. Permits for single-family homes rose 0.9 percent in April, but are below their recent highs seen in the winter months.
Housing starts dropped in most regions The Northeast, Midwest and the West regions all recorded falls, while the South region saw a rise. Activity in the South was especially strong, driven by a 52 percent rise in multi-family units.
Looking through the monthly volatility, the trend in the forward looking permits data is still positive. There are certain headwinds to homebuilding activity, including labor shortages in the construction industry, rising building material costs and a lack of buildable lots.
“We expect housing starts to continue to gain ground through 2018, supported by positive fundamentals such as low unemployment and healthy wage increases, which are expected to offset higher mortgage rates. At the same time, tight inventories and rising prices will continue to support homebuilding”, added TD Economics.
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