April Single-Family Starts Rise for Second Straight Month

       Production of single-family homes edged upward in April as builders responded to improving conditions for new-home buyers, according to figures released by the U.S. Commerce Department on May 19.

       While overall starts for April fell 12.8% to a record-low seasonally adjusted annual pace of 458,000 units, the decline was entirely in multifamily housing, which fell 46% to a 90,000-unit pace. Single-family starts advanced 2.8% to a yearly rate of 368,000 units.

       “With some of the best home-buying conditions of a lifetime now in place — including historically low mortgage rates, affordable prices and a first-time home buyer tax credit — single-family builders are starting to see the light on the horizon as more consumers realize they can now obtain the home of their dreams,” said NAHB Chairman Joe Robson. “Meanwhile, the extreme difficulty that builders are encountering in obtaining financing for new multifamily structures has brought production in that sector almost to a halt.”

       “A severe credit crunch for acquisition, development and construction financing and a lack of investor interest in Low Income Housing Tax Credits are the main factors keeping apartment builders from moving ahead with new projects, along with the competition from excess inventory that’s on the market,” noted NAHB Chief Economist David Crowe. “Ultimately, the logjam in builder financing must be broken in order for housing construction to provide the boost that the national economy needs to get back on track.”

       Meanwhile, improving activity in the single-family sector aligns with what builders have been reporting in recent NAHB surveys, Crowe said. “Very attractive housing affordability factors — particularly the federal $8,000 first-time home buyer tax credit and other tax credits being offered by states for purchases of newly constructed homes — are helping drive potential buyers back into the market,” he said.

       Single-family housing starts rose for a second consecutive month in April. At the same time, issuance of single-family permits, which can be an indicator of future building activity, rose 3.6% to a 373,000-unit annual pace.

       Regionally, total housing starts declined in April across every part of the country except the West, where a 42.5% surge in production offset a nearly equivalent decline in the previous month. Starts fell 30.6% in the Northeast, 21.4% in the Midwest and 21.1% in the South, stemming largely from big declines in the more volatile multifamily sector.

       Similarly, regional permit issuance was down everywhere in April except the West, which showed no change from the prior month. Total residential permits were down 7% in the Northeast, 4.8% in Midwest and 3.4% in the South.

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