Housing Starts Jump 8.2%; Permits Increase 4.9%

WASHINGTON — U.S. April housing data contain a few signs of light but the bottom line is that housing remains in the doldrums.

April housing starts advanced 8.2% to 1.032 million units, while permits gained 4.9% to 978,000 units. But both reflected large gains in multifamily projects that are a better gauge of investment optimism than of the consumer, and at their recent peaks there were more than 2.2 million units in each category.

The key single-family data remain dismal: starts posted a 1.7% decline to 692,000, the lowest level since 604,000 in January 1991, and permits increased 4.0% to 646,000, still skating near their bottom. Single-family housing starts rose in the West and Midwest, and fell in the Northeast and South. It may be hopeful that the regions are evenly mixed.

Single-family permits are steady to up across regions, but multifamily permits are down in the South and Northeast.

Residential home inventories remain bloated, totaling 165.5 million. They were last lower in November 2003, and they mainly reflect single-family inventories where the credit crunch has constrained buying.

The bottom line is that the report has some rays of light but it is far too early to call an end to the housing crisis as the home inventory overhang continues.

Looking ahead, mortgage rates are not trending much lower and housing subsidies are slow in coming. Thus the outlook for housing remains guarded.

“The demand for new homes still is quite weak, the overhang of vacant housing units on the market is at record proportions, consumer sentiment continues to fall, and the economy has been losing jobs since the end of last year,” said National Association of Home Builders chief economist David Seiders in a release. “The fundamentals point to further deterioration of single-family housing production over the balance of this year, and the condo component of the multifamily sector also is destined to lose more ground.”

— Market News International

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