Eye On Housing
Total housing starts declined in April due a drop in the volatile multifamily category. Starts decreased 3.7% month-over-month to a 1.29 million seasonally adjusted annual rate, according to the joint data release from the Census Bureau and HUD.
The pace of single-family starts was roughly flat in April, after an upward revision to the March rate (increased from an initial estimate of 867,000 to 893,000). The April seasonally adjusted annual rate of 894,000 was effectively unchanged. However, the three-month moving average for single-family starts reached a new post-recession high (896,000), which is significant because this metric reduces short-term fluctuations and identifies longer-term trends. These recent growth trends for single-family starts match ongoing healthy levels of the NAHB/Wells Fargo Housing Market Index, now registering a score of 70. However, builders continue to report concerns about ongoing labor access issues and dramatic price increases for softwood lumber. Recent price increases for lumber are adding about $7,000 in price per newly-built single-family home.
On a year-to-date basis, single-family starts are 8% higher as of April relative to the first four months of 2017, performing slightly better than our forecast. Single-family permits, a useful indicator of future construction activity, were up slightly (0.9%) in April and have posted a more than 8% gain thus far in 2018 compared to last year.
Multifamily starts (2+ unit production) were down 11% in April to a 393,000 annual rate, after a surprisingly strong March (443,000). Multifamily construction activity has outperformed our forecast thus far this year. Our forecast calls for flat multifamily construction conditions in 2018. However on a year-to-date basis, 5+ unit production is up more than 10% compared to this time in 2017.
With respect to housing’s economic impact, 55% of homes under construction in April were multifamily (614,000). The current count of apartments under construction is roughly unchanged over the last year. In April, there were 510,000 single-family units under construction, a gain of more than 11% from this time in 2017.
Regional data shows strength outside of the Midwest thus far in 2018. For the first four months of the year, single-family construction is 21% higher in the West (led by growth markets in states such as Idaho), 7% higher in the South, and almost 4% higher in the Northeast (although some state are showing declines). Midwest single-family construction is almost 7% lower on a year-to-date basis, due to declines in states like South Dakota.
What does this mean? Typo? “Multifamily starts (2+ unit production) were down 11% in March to a 393,000 annual rate, after a surprisingly strong March (443,000).” Thanks, Aaron
Good catch. Fixed. Thanks. First number was April rate.