Housing starts fell 10.6% in April from the previous month, the Commerce Department and the Department of Housing and Urban Development (HUD) said in a jointly released statement on Tuesday.
The unexpected drop was mainly due to the 28.3% plunge in volatile multi-family housing (homes with five or more units). Single-family home starts fell 5.1%.
The seasonally-adjusted annual pace of 523,000 homes in April was also 23.9% below the level from a year ago – back when the homebuyer’s tax credit was still propping up the housing market.
“While mortgage rates are low and house prices are as affordable as they’ve been in a generation, the decline in April’s housing starts is indicative of the low level of confidence that consumers have in the housing market,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nevada.
NAHB Chief Economist David Crowe said, “The fundamentals – such as economic growth and employment – are beginning to shape up and will eventually provide enough momentum to push housing forward at a healthy pace. But until then, builders are unwilling to move forward. The issuance of housing permits, an indication of future housing activity, has remained at about the same level as the first quarter of the year.”
Regionally, starts shot up 15.7% in the Midwest and rose 3.7% in the West, while they plummeted 23% in the South and fell 4.8% in the Northeast.
Separately, home builders’ confidence in the housing market hasn’t changed much since late last year, according to a report released by the NAHB on Monday.
“Builder confidence has hardly budged over the past six months as persistent concerns regarding competition from distressed property sales, lack of production credit, inaccurate appraisals, and proposals to reduce government support of housing have continued to cloud the outlook,” said Nielsen. “In addition, many builders in this month’s survey cited high gas prices as a further contributor to consumer anxiety and reluctance to go forward with a home purchase.”
Sources:
U.S. Census Bureau
The National Association of Home Builders
