Don’t Be Misled By the Headlines, Housing Continued in the Doldrums During April

The headlines screamed 13.2% increase in housing starts and 8.0% increase in building permits during April, but a closer look at the numbers shows little to cheer about. The reason is that almost all of the increase pertained to multifamily apartments and condos. Single family starts rose at a seasonally adjusted annual rate of only 0.8% and permits by an even lower 0.3% which indicates that there are more sub-par months ahead. And since in dollar terms multifamily dwellings account for only about 17% of total residential construction spending, the April data will contribute little to GDP and overall economic performance.

At 649,000 units in April, single family starts are still only at about one-third the level of the 2006 pre-recession housing boom, and about half the level that prevailed over the decade from 1995 to 2005. Multifamily starts, on the other hand, are only about 20% below the 2006 peak and roughly comparable to the level during the 1995-2005 decade, clearly demonstrating the new normal preference for renting over owning.