Home Building Hits 8-Year High

THURSDAY, MAY 21, 2015

WASHINGTON, DC—The U.S. housing market has apparently drained the last dregs of winter and is well back on the road to recovery, new government data suggests.

Housing starts rose 20.2 percent in April to reach a seasonally adjusted annual rate of 1.135 million units—the highest level seen since November 2008, the Commerce Department reported Tuesday (May 19).

In addition, applications for building permits—a sign of future construction—rose 10.1 percent to 1.143 million in April.

Starts were up 9.2 percent above the April 2014 rate of 1.039 million, and permits were up 6.4 percent over last year’s rate of 1.074 million for the same month, the Commerce Department said.

Sectors Surge

Both single-family and multifamily housing sectors registered gains in April.

Single-family housing starts increased 16.7 percent to a seasonally adjusted annual rate of 733,000, while multifamily starts rose 27.2 percent to 402,000 units.

The sectors’ futures brightened, too. Multifamily permits registered a 20.5 percent gain to a rate of 477,000, and permits for single-family residences increased 3.7 percent from March.

For comparison, nationwide housing starts hit a record low of 554,000 in 2009 and a three-decade high of 2.07 million in 2005.

By Region

The Commerce Department reported the sharpest April gains in the Northeast—a region walloped by a string of winter storms at the beginning of the year.

Home building production in that region spiked 85.9 percent.

Construction activity in the Midwest and West also increased, reaching 27.8 percent and 39 percent, respectively.


"This month's report shows release of pent-up demand and evidence of a sustainable housing recovery," according to NAHB chairman Tom Woods.

Housing production in the South, however, dipped by almost 2 percent.

The South makes up about half of single-family housing starts, according to the New York Times.

“In order to see any substantial acceleration in starts in the months to come, we’ll need to see further strengthening in the South,” Mesirow Financial economist David Nice said in a note to clients.

Supply and Demand

“This month’s report shows release of pent-up demand and evidence of a sustainable housing recovery,” National Association of Home Builders’ Chairman Tom Woods said in a statement.

NAHB Chief Economist David Crowe added, “The April gains make up for the production dips we saw in the past two months, but single-family housing is still only about halfway back to what could be considered a normal market.”

“With low interest rates and affordable home prices, we expect more upward momentum in the months ahead.” 

Meanwhile, some experts warn that builders will have difficulty sustaining the robust pace set in April.


Tagged categories: Economy; Good Technical Practice; Home builders; Housing; Housing starts; National Association of Home Builders (NAHB); North America; Residential Construction

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