Total U.S. Housing starts in April rose 6.6% to a seasonally adjusted annual rate of 1.17 million units. The pace was 1.7% below the U.S. Census Bureau’s April 2015 estimate. But the average starts rate over the three months ending in April is more than 14% above the average of February, March and April rates in 2015.
Single-family housing starts were up 3.3% in April to a seasonally adjusted annual rate of 778,000, putting the pace of single-family production 4.3% above April 2015. Single-family starts in the most recent three months have averaged 21% higher than the average of February, March and April rates in 2015.
Permits rose in April but are running slightly below starts. This suggests that starts are likely to remain close to their current pace and are unlikely to accelerate in the near term. But the National Association of Home Builders (NAHB) expects continued growth in single-family construction in the months ahead, given ongoing strength in the labor market and favorable demographics. Consistent with this forecast, issuance of permits for single-family housing projects is running 8.4% higher in April than a year prior, and the comparison of three-month averages shows single-family pacing more than 11% ahead of 2015.
Multifamily starts (buildings with two or more housing units) came in at a 373,000 seasonally adjusted annual pace, up 10.7% from March but down 12.9% compared to April 2015. Nevertheless, the three-month average for multifamily starts in February, March and April 2016 is 12.4% above the same three months in 2015.
Suggesting an industry shift toward single-family production, multifamily permits are down almost 24% on year-over-year basis as of April, and the average of the latest three months’ rates is 16.6% below 2015’s same months.
Regionally, expansion in April was strong in the huge housing market of the South, where single-family starts for April were almost 16% higher than a year ago, and the three-month averages for both single-family and multifamily starts are solidly greater compared to the same months in 2015. Three-month averages for rates of permit issuance in the South have fallen compared to last year, though.
Comparing average rates for the most-recent three months to last year shows single-family strength across the regions, with no permit growth in the South offering a potential warning of impending slowdown.
Single Family Starts Permits
Northeast +39.3% +23.1%
Midwest +41.4% +20.8%
South +17.7% -0.3%
West +11.4% +11.0%
Three-month averages for multifamily construction show a slightly more mixed picture, with the national slowdown reflected disproportionately in falling permits in the Northeast and South.
Multifamily Starts Permits
Northeast -13.3% -39.1%
Midwest +17.5% +15.9%
South +5.9% -14.7%
West +0.7% +18.1%
The NAHB examined the count of homes currently under construction to check the market mix and momentum of recovery in home construction. As of April, 57% of units under construction in the nation were multifamily (566,000), a 13% gain from a year earlier. There were 433,000 single-family homes under construction, which is 18% higher than April of 2015.
“Growth in home construction is a key bright spot in the overall economy, given the lackluster GDP measure for the first quarter,” according to NAHB’S analysis of the Census Bureau and Department of Housing and Urban Development report. “In fact, the headline first quarter growth rate of 0.5% was just about equal to home building’s contribution to economic growth (0.49 percentage points).”
