This morning’s reports for April Housing Starts and Building Permits both came in significantly stronger than expected indicating that at least the residential construction sector is seeing a bounce back from the winter freeze. In the case of Housing Starts, April’s reading came in at a seasonally adjusted annualized rate (SAAR) of 1.135 million, which was the highest monthly reading since November 2007. In the case of Building Permits, April came in at a level of 1.143 million (highest since June 2008) compared to expectations of 1.064 million.
The table below breaks down this month’s report by type of unit and region. As shown above and below, April saw strong growth in both single family and multi-family starts with gains of 16.7% and 27.2%, respectively. In the case of Building Permits, the breakdown was more skewed towards multi-family units. On a regional basis, in the case of both Starts and Permits, the northeast saw the strongest growth in April, which makes perfect sense when you consider the fact that it was the hardest hit area from the winter weather.
This month’s level of Housing Starts was impressive, but part of that strength is due to the rebound from the depressed levels we saw in the last few months. Given the uneven readings of the last few months, it is probably more appropriate to see how average levels of Housing Starts are trending. In the chart below we show a 12 month average of Housing Starts going back to 2000. Over the last year, the average level of Housing Starts has been 1.0184 million, which is the highest level since September 2008. Admittedly, the pace of recovery has been almost painfully slow, but the trend has been higher. Additionally, with levels of Housing Starts still below historical averages on both an absolute and population adjusted basis, there is plenty of room for further upside.