U.S. April Housing Starts Post Surprise Rise By 8.2% Over Multi-Family Units

Washington, D.C. (AHN) - The housing starts surged in April led by an increase in multi-family units as the single-family starts continued to decline to the lowest level in 17 years.

U.S. home builders broke ground on 692,000 single-family homes at a seasonally adjusted annual rate, falling for the 12th consecutive month by 1.7 percent.

While, the overall housing starts increased 8.2 percent to a seasonally adjusted 1.032 million annual rate, led by the construction of multifamily units or apartment building, the Commerce Department said Friday.

Housing starts had plunged to 13.8 percent in March to 954,000 after the construction of multifamily units dipped by as much as 35 percent in March, according to the report.

The market analysts surveyed by Dow Jones Newswires projected that the housing starts for the month of April to drop by 1.4 percent to a 934,000-unit annual rate.

Construction of housing with two or more (multi-family) units surged by 36 percent to 340,000, the Commerce Department estimated in its report.

"You cannot take the headline starts number seriously because of the increase in the multifamily number," Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York, told Bloomberg.

"The trends are horrific [because] why would you spend money to buy a depreciating asset?" he said.

The reported showed that building permits rose by 4.9 percent in April to 978,000, a seasonally adjusted annual rate. The building permits have been down by 34 percent over the past year.

The single-family building permits moved up for the first time in the last 12 months by 4 percent, while multi-family building permits increased by 6.8 percent.

According to the current figures, the new-home sales for the month of March were down by 36.6 percent compared to the data a year ago.

On Thursday, the National Association of Home Builders (NAHB) stated in its report that the index for sales of new, single-family homes dropped to 19 in May from 20.

"The magnitude of the housing bubble was unprecedented, and the corrective process promises to be a long and painful one," MFR Inc. Joshua Shapiro of the NAHB data, told The Wall Street Journal.

"Hence, it is hardly surprising that builder sentiment is still languishing very near its all-time low."

The report showed that the regional housing starts rose in the Midwest by 24.4 percent, the West by 18.5 percent, the South by 3.6 percent, but the starts declined in the Northeast by 12.7 percent.