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Homebuilding in the U.S. rose in April

WASHINGTON • A gauge of homebuilding across the U.S. increased in April, driven by an uptick in single-family construction across much of the country.

So-called housing starts rose 5.7% in April from the prior month to a seasonally adjusted annual rate of 1.235 million, the Commerce Department said Thursday. Residential building permits, which can signal how much construction is in the pipeline, climbed 0.6% from March to an annual pace of 1.296 million in April, the first monthly increase since December.

Building projects for single-family homes rose in every region of the U.S. but the South. Meanwhile, construction in the Northeast increased at the fastest pace in nearly two years. This building uptick suggests residential construction could boost economic growth in the second quarter more than expected.

Overall building rose for both single-family homes and apartment properties. Permits for single-family homes, however, declined, suggesting the starts gain “might represent a temporary burst rather than a fundamental turn,” according to Daiwa Capital Markets’ Michael Moran.

Building projects for single families have held near the highest levels since before the most recent recession, while multifamily construction eased because of a glut of apartment properties in some parts of the country.

Housing-starts data are volatile from month to month and can be subject to large revisions. April’s 5.7% rise for starts came with a margin for error of 13 percentage points. Still, home construction has been cooling more broadly. Starts were down 7.2% in the first four months of 2019 compared with the same period a year earlier.

The U.S. economy should be poised to spur strong consumer demand for housing. Employers continue to churn out jobs at a time when the unemployment rate is hovering near historic lows. This has spurred some of the fastest wage growth in recent years and is buoying solid consumer confidence.

But a host of factors, including a lack of available land and rising input costs have driven up prices, causing a slowdown in the broader housing market.

Still, interest rates have pulled back recently. New-home price growth has decelerated and home sales in this category have picked up, a potential bright spot for the market.

“This implies builders will build more if new home sales continue at their current pace,” according to Ian Shepherdson, chief economist at Pantheon Macroeconomics. “Homebuilders eventually will act; no one wants to lose share in a rising market.”

Construction workers build housing in Salisbury, Mass., in January.

The Associated Press

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