Housing Starts slowest pace since November

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United States

April housing starts totaled 1.172mm, well below the forecast of 1.26mm and down from 1.203mm in March which was revised down slightly. This is the slowest pace of starts since November. The main factor in the miss was the drop in multi family starts by 34k to 337k while single family starts were higher by 3k to 835k. See chart. As these numbers are very volatile month to month because of the influence of weather and permitting, let’s smooth it out. Single family starts have averaged 840k year to date which is up 7.4% y/o/y but still remains almost 10% below its 15 year average and 18% less than its 25 year average and we of course today have a higher population. Multi family starts are averaging 390k year to date, up 5.1% y/o/y and above the 15 and 25 year average of around 290k as we know being an apartment landlord has been a very good business over the past few years and thus brings out the supply.

SINGLE FAMILY HOUSING STARTS

The permit side was disappointing in the single family space as it fell 37k to 789k and that’s the lowest since November when it printed 786k. As permits are of course a precursor to future starts, this single family number doesn’t square with the May NAHB builder survey yesterday but maybe permitting has improved this month. As seen in Friday’s UoM confidence figure, we might have reached an inflection point on the pricing of homes where pressure points are being reached. We’ll see if this anecdotal data is something tangible. Multi family permits rose by 6k to 440k.

Bottom line, the spring transaction season in housing has been pretty good as seen in the mortgage application data and new home sales figure. What is clear is the market needs more lower priced homes because that is where the greatest demand is coming from and while the NAHB builder survey is hugely optimistic, the starts and permits data has been slower to respond. Lastly, as mentioned, price might really start to matter in the purchase of a home.