May 20, 2010
Nationwide housing starts rose 5.8% to a seasonally adjusted annual rate of 672,000 units in April 2010 as the deadline for an important home buyer tax incentive arrived, according to figures released by the U.S. Commerce Department.
“While some of the starts activity noted in the report reflected homes for which buyers had just signed a contract at the tail-end of the tax credit program, the rest was probably tied to builders replenishing their inventories in preparation for the post-tax credit era,” said Bob Jones, Chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich. “That said, builders are maintaining a cautious attitude with regard to new building as the economy and housing markets slowly recover.”
“The government’s latest numbers indicate that production of new single-family homes got a substantial boost in April as the tax credit program wrapped up and builders worked to resupply their depleted inventories,” agreed NAHB Chief Economist David Crowe. “As our latest surveys have indicated, builders are anticipating that factors such as low mortgage rates, attractive prices and the recovering employment market will replace the tax credit as incentives to buy. Meanwhile, the drop-off in building permits in April indicates that builders are working down the inventory of permits pulled in the previous month and taking care not to get ahead of the market. Builders also continue facing difficulty in obtaining project financing, which will limit the pace of a housing recovery.”
Single-family housing starts surged 10.2% to a seasonally adjusted annual rate of 593,000 units in April, the strongest rate since August of 2008. Meanwhile, multifamily starts posted an 18.6% decline to a 79,000-unit rate, offsetting a big gain posted by that sector in the previous month.
Permit issuance, which can be an indicator of future building activity, declined 11.5% overall to a seasonally adjusted annual rate of 606,000 units in April. This reflected a 10.7% decline to a 484,000-unit rate on the single-family side and a 14.7% decline to a 122,000-unit rate on the multifamily side.
Three out of four regions posted solid gains in new housing production in April. Combined single- and multifamily starts rose 23.9% in the Northeast, 16.7% in the Midwest and 7% in the South. The West registered a 13.3% decline.
Conversely, permit issuance was down in three out of four regions in April. The Northeast posted a 7.4% decline, the South registered a 14.3% decline and the West posted a 16% decline. Permit issuance remained unchanged from the previous month in the Midwest.