Single-family housing starts improved by 1.6% on a month-over-month basis to a rate of 846,000 in April, according to the U.S. Census Bureau and Department of Housing and Urban Development.
Privately owned housing starts in April were at a seasonally adjusted annual rate of 1,401,000, 2.2% above the revised March estimate but 22.3% below the rate during April 2022.
“Single-family housing starts rose 1.6% month over month, a trend expected given the strong sales backdrop,” says Zonda chief economist Ali Wolf. “Stronger new-home sales are encouraging builders to meet the demand by building more homes, especially given the tight resale supply. We expect to see starts activity continue to trend up over the next few months as long as credit markets don’t tighten too much.”
Single-family housing units authorized by building permits in April were at a rate of 855,000, 3.1% above the revised March figure of 829,000. Privately owned authorizations increased 1.5% month over month to a seasonally adjusted annual rate of 1,416,000 but remained 21.1% below the rate in April 2022.
“We are likely to upgrade our near-term starts forecast as the steady upward trend in permits since January is consistent with a tight inventory of existing homes pushing buyers toward the new-home market,” says Fannie Mae chief economist Doug Duncan. “Additionally, recent Q1 earnings calls from public builders have been more optimistic than earlier in the year, and the NAHB Housing Market Index rose five points in May to return to a ‘neutral’ outlook of 50 for the first time since July 2022.”
Duncan says there is downside risk, though, as many smaller builders are likely facing tighter construction loan credit amid the fallout from recent banking turmoil.
“Additionally, the market has consistently underestimated the Fed’s resolve on lowering inflation to its target level, so a further resurgence of interest rates cannot be ruled out; if this occurs, we believe the current strain on affordability could worsen and work to suppress future demand,” says Duncan.
Privately owned housing completions in April were at a seasonally adjusted annual rate of 1,375,000, 10.4% below the revised March estimate but 1% higher than a year ago. Single-family completions decreased 6.5% month over month to 971,000, and completions for units in buildings with five units or more was 400,000 in April.
