Forbes

19 May  2015

Groundbreakings on new homes rose by a dramatic 20.2% in April and permitting hit a seven-year high, the U.S. Commerce Department said Tuesday. – New Res Construction April 2015 – The numbers suggest that the ongoing inventory shortage holding back the housing recovery should ease in coming months.

Housing starts stood at a seasonally adjusted, annual rate of 1.14 million in April. That pace is 9.2% higher than the rate of 1.04 million in April 2014. Tuesday’s numbers surpassed expectations of economists surveyed by Bloomberg ahead of the release.

Single-family housing starts in April rose 16.7% above the level in March, hitting a (seasonally adjusted, annual) rate of 733,000. Starts on buildings with five or more units were up by 32% in April, to a (seasonally adjusted, annual) rate of 389,000.

April also marked the highest level of permitting the nation has seen since June 2008, when the (seasonally adjusted, annual) rate was 1.18 million. The number of building permits issued in April rose 10.1% over March, to a seasonally adjusted annual rate of 1.14 million. That rate was 6.4% higher than a year earlier, when the estimate stood at 1.07 million. Single-family permits were up by 3.7% in April compared to March at a seasonally adjusted, annual estimate of 666,000. Buildings with five units or more hit a permit rate of 444,000 in April, up 20% compared to March.

Despite the strong numbers, builder confidence in the market for newly constructed, single-family homes fell two points in May to a level of 54, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index, released Monday. However, a reading of 50 or higher means that more builders rate conditions are good than poor; the measure has now hit that mark for eleven consecutive months.

“Consumers are exhibiting caution, and want to be on more stable financial footing before purchasing a home,” said David Crowe, NAHB’s chief economist. “On the bright side, the HMI component measuring future sales expectations has been tracking upward all year, mortgage rates remain low, and house prices are affordable. These factors should spur the release of pent-up demand moving forward.