A new Commerce Department report, released today and highlighted in this article from Bloomberg, focuses on an increase in housing starts of 20.2% that was the biggest jump since February 1991.
New residential construction in the U.S. surged in April to the highest level in more than seven years, indicating the industry regained its footing after the soft patch at the beginning of the year.
Housing starts jumped 20.2% to a 1.14 million annualized rate, the most since November 2007, from a 944,000 pace in March. More permits, a proxy for future construction, were issued than at any time since June 2008.
An improving labor market and mortgage costs close to multi-year lows are reviving residential construction, a sign that the weakness in early 2015 was probably due to harsh winter weather.
“Housing demand is clearly picking up,” said David Sloan, a senior economist at 4Cast Inc. in New York. “Housing should show quite strong momentum over the next few quarters. Permits also suggest solid underlying demand.”
The surge in housing starts last month was paced by single-family projects in the West and multifamily in the Northeast, pointing to broad-based gains in the industry. Construction of single-family homes in all the U.S. jumped 16.7% to a 733,000 rate, the most since January 2008. Three of four regions showed gains, led by the Northeast and West.
An improving labor market will help sustain demand. Payrolls climbed by 223,000 in April after a 85,000 gain the prior month, according to Labor Department data. The jobless rate fell to 5.4%, the lowest since May 2008.
