New residential construction in the U.S. surged in April to the highest level in more than seven years, indicating the industry regained its footing after the soft patch at the beginning of the year.
Housing starts jumped 20.2 percent to a 1.14 million annualized rate, the most since November 2007, from a 944,000 pace in March, a Commerce Department report showed Tuesday in Washington. The median forecast of 83 economists surveyed by Bloomberg was 1.02 million. More permits, a proxy for future construction, were issued than at any time since June 2008.
An improving labor market and mortgage costs close to multi-year lows are reviving residential construction, a sign that the weakness in early 2015 was probably due to harsh winter weather. Builders including PulteGroup Inc. have said the spring selling season is off to a good start, and sentiment data for May showed developers are optimistic about the next six months.
“Homebuilding is finally finding its rhythm,” Ryan Sweet, senior economist at Moody’s Analytics Inc. in West Chester Pennsylvania, said before the report. “With the job market tightening, wages showing subtle signs of improvement, and borrowing costs at historical lows, we should see a solid pickup in the second half.”
Estimates in the Bloomberg survey of economists ranged from 955,000 to 1.2 million. The prior month’s pace was previously reported as 926,000.
Last month’s 20.2 percent jump in starts was the biggest since February 1991. Construction slumped 16.7 percent in February as harsh weather prevent developers from starting new projects.