Article Summary
The Census Bureau’s monthly construction numbers for April show an increase in construction activity, although building permits have slightly decreased. Housing starts and building permits are the most closely watched metrics in this report. Despite some volatility in housing starts, they were only slightly higher than the previous month. The surge in multifamily starts drove the increase in housing starts, while single-unit starts declined.
What This Means for You
- The construction numbers indicate a slight improvement in the housing market, providing a glimmer of hope among other gloomy housing and mortgage market metrics.
- Although the increase in housing starts is encouraging, it remains essential to monitor the situation closely, as single-unit starts have declined.
- The housing market’s strength compared to the pre-pandemic time frame offers a positive outlook, but it is still important to keep an eye on builder confidence and mortgage applications.
- The focus on multifamily starts could signal a potential shift in housing preferences, and it would be beneficial to monitor this trend for future investment opportunities or as an indicator of housing demand.
Original Post
The Census Bureau has released the monthly construction numbers for April, which reveal an uptick in construction activity, albeit with slightly lower permitting. While there are several other measures in this report, building permits and housing starts (which mark the beginning of construction) are the most frequently monitored metrics.
As illustrated in the chart below, housing starts tend to exhibit greater volatility on a month-to-month basis. However, in the current context, they were only slightly higher than the previous month, with an annual pace of 1.361 million compared to 1.339 million.
Starts would have decreased if it weren’t for the multifamily sector. Single-unit starts dropped from 947k to 927k, while multifamily starts soared from 378k to 420k, representing the highest level since late 2023.
Over the past few years, there are several housing and mortgage market indicators that present a somewhat disheartening picture. For example, mortgage applications and builder confidence are worth mentioning. However, the construction data is not as negative as it was a few years ago, as it remains one of the stronger examples of sectoral strength in comparison to most of the pre-pandemic time frame.
Key Terms
- Housing Starts
- Building Permits
- Single-Unit Starts
- Multifamily Starts
- Mortgage Applications
- Builder Confidence
- Housing Market
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