Within the past hour, the U.S. Commerce Department has issued data showing that the housing market had strengthened somewhat in April, at least judging by the pace of new homebuilding. Specifically, the government indicated that housing starts rose by 2.6% last month, from March, coming in at an annualized rate of 717,000 units. March's figure, meanwhile, was revised up from an earlier estimated 654,000 annual unit pace, to an estimated 699,000 homes.
Expectations had been that the April figure would have come in at 685,000 homes. So this was a solid improvement over forecasts, and further affirmed that this key sector is on the mend, if still just incrementally so. However, while the month-to-month gain, at 2.6% was modest, the year-to-year increase was formidable, at nearly 30%.
At the same time, construction of single-family homes, which make up 69% of the aggregate market in this country, rose by 2.3% in April, on a month-to-month basis. All told, starts are now up sharply from the recession low of 478,000 homes begun in April 2009. However, at the cycle's peak, in early 2006, more than 2.3 million homes had been started on an annualized basis. Thus, while we have come back some, and we continue to believe that a sustainable low in this category has been put in, we have plenty of room to go before we would consider the comeback to be sizable.
Meanwhile, a more forward-looking metric, building permits, came in at an annualized rate of 715,000 homes. However, that was well down from the 769,000 level seen in the prior month. Here, too, though, the increase was impressive when compared with the prior year, gaining a solid 23.7% in the 12-month span.
All told, starts have held in a fairly narrow band so far this year, coming in at 720,000, 718,000, 699,000, and 717,000 for the first four months of 2012, respectively. Looking over the prior two years, though, the gains have been steady and rather impressive. As for the respective regions of the country, starts rose in the Midwest and the South, but fell in the Northeast and the West. The South is by far the largest region of the United States when it comes to new construction, accounting for 54% of the overall building category in April.
On the whole, then, this was a decent report, but certainly not one to get too excited over, in our opinion.
At the time this article was written, the author did not have positions in any of the companies mentioned.