Single-family housing starts were up 3.3% for the month of April to a seasonally adjusted annual rate of 778,000, according to estimates from the Census Bureau and the Department of Housing and Urban Development. This marks a 4.3% gain in the pace of single-family construction on a year-over-year basis and is consistent with recent flat readings of the NAHB/Wells Fargo Housing Market Index.
On a three-month moving average basis, single-family starts have been effectively flat since February, despite recent monthly volatility. NAHB expects growth in single-family construction in the months ahead, given ongoing strength in the labor market and favorable demographics. Consistent with this forecast, single-family permits are running 8.4% higher in April than a year prior.
Multifamily starts (2+ unit production) came in at a 394,000 pace on a seasonally adjusted annual basis, down almost 12% on a year-over-year basis as the market rebalances the production mix to single-family. Multifamily permits are down almost 24% on year-over-year basis as of April.
Regionally, expansion has been particularly strong in the South, where single-family starts for April were almost 16% higher than a year ago. On a non-seasonally adjusted basis, 56% of single-family starts for the month were located in the South. There has been a weakening in the West, where single-family starts were down almost 20% on a year-over-year basis.
Taking the long view, an examination of the count of homes currently under construction provides the degree of market mix and momentum of the recovery in home construction. As of April, 57% of units under construction in the nation were multifamily (566,000), a 13% gain from a year earlier. There were 433,000 single-family homes under construction, which is 18% higher than April of 2015.
Growth in home construction is a key bright spot in the overall economy, given the lackluster GDP measure for the first quarter. In fact, the headline first quarter growth rate of 0.5% was just about equal to home building’s contribution to economic growth (0.49 percentage points).