A correction from an unsustainably high level of production on the volatile multifamily side was largely responsible for a 16.5 percent dip in nationwide housing starts to a seasonally adjusted annual rate of 853,000 units in April, according to newly released figures from HUD and the U.S. Census Bureau. However, permits for new construction headed solidly higher in the month, with a particularly strong gain in multifamily issuance.
"While builders today are considerably more optimistic than they have been at earlier stages of the housing recovery, numerous challenges are slowing their ability to get new projects underway," said Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C. "In particular, limited access to construction credit, tough qualification standards for mortgage borrowers and rising costs for building materials, developable lots and labor are impacting the pace of construction activity."
While single-family starts posted a modest, 2.1 percent decline to a seasonally adjusted annual rate of 610,000 units in April, multifamily starts posted a 38.9 percent decline to 243,000 units. Combined starts activity fell 12.8 percent in the Northeast, 27.9 percent in the South and 6.2 percent in the West, but increased 10.9 percent in the Midwest.
"The big decline in April housing production was mostly on the multifamily side, which recorded a similarly dramatic increase in the previous month," noted NAHB Chief Economist David Crowe. "Meanwhile, overall permits for new construction surpassed the million-unit mark and the number of yet-to-be-used permits rose in April, which is a good indicator that the dip in building activity was likely a temporary pause due partly to unseasonably poor weather conditions."
Total permit issuance, which can be an indicator of future building activity, gained 14.3 percent to a seasonally adjusted annual rate of 1.02 million units in April - the fastest pace since June of 2008. That increase reflected a 3.0 percent gain to 617,000 units on the single-family side and a 37.5 percent gain to 400,000 units on the multifamily side.
Three out of four regions posted double-digit gains in permit issuance in April, with the Midwest recording a 22.3 percent increase, the South registering a 16.0 percent gain and the West posting a 12.9 percent gain. The Northeast posted a 2.0 percent decline.