Unexpected declines in U.S. new-home construction and building permits in April indicate the market is off to a weak start this quarter, government data showed Tuesday.
Highlights of Housing Starts (April)
• Residential starts fell 2.6% to 1.17 mln annualized rate (forecast was 1.26 mln), lowest since November, following revised 1.2 mln pace in the prior month
• Permits decreased 2.5% to 1.23 mln annualized pace (forecast was 1.27 million) from 1.26 mln
• The decline in starts was driven by a 9.2% drop in multi-family construction
The results indicate that residential construction is at risk of dragging down growth in the second quarter, lessening any economic rebound after weakness in the previous period. Other indicators of housing demand remain healthy, suggesting that part of the decline in starts and permits could be attributed to shortages of labor and ready-to-build lots, as well as unusually warm weather that may have moved up construction earlier in 2017. Steady hiring and healthier finances are likely to continue to drive home purchases in coming months, echoed by a rise in homebuilder confidence to the second-highest level since 2005.
• Single-family house construction rose 0.4 percent to an 835,000 rate from 832,000 the prior month
• Work on multi-family homes, such as apartment buildings and condominiums, fell to an annual rate of 337,000; data on these projects can be volatile
• Northeast and South regions posted declines in starts, while Midwest and West showed gains; Northeast starts were the lowest since February 2015
• Report includes revisions going back to January 2015
• Data released by the Census Bureau and Department of Housing and Urban Development in Washington
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