Declines in U.S. Housing Starts, Permits Show Sector Weakness

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

Key Takeaways

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.

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Other Details

• 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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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell