Housing production slipped in April compared to revised March figure but starts and permits remained above those of a year earlier.
Data from the HUD and the Commerce Department show a 3.7% drop month-over-month to 1,287,000 units (seasonally adjusted annual rate) which is 10.5% higher than a year earlier. Single family starts (894,000 SAAR) were up 0.1% from March while the multifamily sector (393,000) declined 11.3%.
“Single-family starts are up 8.3 percent for the first four months of the year relative to the start of 2017, which is higher than our forecast and bodes well for the rest of the year,” said NAHB Chief Economist Robert Dietz. “However, builders must manage supply-side hurdles, such as ongoing building material price increases and shortages of land and labor, to meet growing housing demand. Lumber prices continue to rise, with recent increases adding more than $7,000 to the price of an average single-family home.”
Housing completions were up 2.8% month-over-month and 14.8% year-over-year to 1,257,000 SAAR.
Permits issued totalled 1,352,000, down 1.8% from March 2018 but up 7.7% from April 2017.
Optimistic message on supply
“The annual increase in permits, housing starts, and completions sends an optimistic message for the housing market as it signals some relief for the housing shortage,” commented First American chief economist Mark Fleming.
Regionally, combined single- and multifamily housing production increased 6.4% in the South but fell 8.1% in the Northeast, 12% in the West and 16.3% in the Midwest.
LendingTree chief economist Tendayi Kapfidze says that the story told by the data is indicative of affordability issues, especially the shift towards multifamily.
“Multi-family units are at lower price points and include significant rental units,” he said. “Notably, single-family starts are particularly weak in the high cost Northeast that is also the most exposed region to the negative impacts of the tax plan.”
More market update: