Housing starts measure initial construction of residential units (single-family and multi-family) each month. A rising (falling) trend points to gains (declines) in demand for furniture, home furnishings and appliances. Why Investors Care
| Released on 5/16/07 For Apr 2007 | |||||||||||||||||||||||
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Highlights
Housing starts continued to edge up in April while permits dropped notably. Weather may have helped starts while permits may reflect continued sluggishness in housing. Housing starts in April rose 2.5 percent, following a 0.3 percent increase the prior month. April's 1.528 million annual rate was above the consensus forecast for 1.475 million units and compared to the initial March estimate of 1.518 million units. March was revised down to 1.491 million units. Housing starts are 16.1 percent below their year-ago rate of 1.821 million. In April, single-family starts rose 1.6 percent while multifamily starts advanced 6.2 percent.
Regionally, starts in April were strongest in the Northeast with a 31.3 percent surge. Starts also advanced 7.8 percent in the West. Starts in the Midwest and South declined, 14.2 percent and 0.1 percent, respectively. The jump in the Northeast reflects atypically better early spring weather.
Housing permits fell 8.9 percent to a 1.429 million unit pace in April from 1.569 million units in March. Single-family permits dropped 6.0 percent while multifamily permits declined 16.4 percent. On a year-on-year basis, permits are down 28.1 percent in April.
The April starts report shows unexpected strength in the economy and will at least get the markets to rethink how cool the economy is. The weakness in permits may actually end up getting more attention than starts and those numbers point in the other direction. The impact on the markets will depend on whether focus on starts or permits and in the end, focus will likely be on permits. If so, the overall report is not far from expectations.
Housing starts surprised the markets with last month's report of a 0.8 percent increase in March to a 1.518 million annual rate. Housing permits also posted a small gain in March but permits are not much of a leading indicator for starts - they generally coincide. While the underlying fundamentals for housing starts remain soft, unseasonably dry weather in parts of the U.S. may give starts a little unexpected lift in April.
Housing starts Consensus Forecast for April 07: 1.475 million-unit rate
Range: 1.40 million to 1.59 million-unit rate
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Monthly figures are often volatile; housing starts fluctuate more than many indicators. According to the Commerce Department, it takes six months for total housing starts to establish a trend. Consequently, we have depicted total starts relative to a six month moving average. |
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