A major dichotomy developed in the U.S. housing market in April, as data issued earlier this morning noted that housing starts had fallen sharply last month, but that building permits, a more forward-looking survey, actually had risen nicely.
Specifically, the Department of Commerce reported that housing starts tumbled in April, falling from March's downwardly revised estimated annual building rate of 1.021 million homes to just 853,000 dwellings. That was a 16.5% downtick. Initially, the March tally had been estimated at 1.036 million starts. It should be noted that this was the lowest annual rate in 2013 thus far, and the weakest showing since last November when 842,000 units had been started. Still, this latest month's tally was much better than the survey taken last April, when an estimated 754,000 homes had seen ground broken.
At the same time, the data on building permits were uplifting, with April showing that permits had increased to an annualized level of 1.017 million homes. That tally was up nicely from the 890,000 figure inked in March, and was the first time since the long building contraction had gotten going that permits had soared back above the one million annual mark. Also, as was the case with housing starts, the tally was well above the year-earlier figure, which in this case stood at just 749,000 homes.
Looking at the building data on a regional basis, we saw some backtracking in starts last month in the Northeast, with that area seeing starts drop by almost 13%. Two other locales also saw weaker metrics, with the South reporting a sharp 27.9% correction, while the West saw building fall by 6.2%. Accordingly, only the Midwest, the second smallest region after the Northeast, saw an increase in starts last month.
As to building permits, they were up by double digits in all regions save for the Northeast, which eased back by a token 2.0% in April.
Meanwhile, our sense is that much of this backtracking last month represented just some reaction to the inclement spring weather, which dotted much of the nation's landscape last month. In fact, we believe that this market, which is being fueled by pent-up demand, record low interest rates, low prices, and rising affordability, is on a durable recovery path that should continue for several years more. In all, this was a report that does not alter the overall building picture, assuming the latest setback does not prove to have staying power.
At the time of this article's writing, the author did not have positions in any of the companies mentioned.