Housing Starts in U.S. Surge to Seven-Year High as Weather Warms

[Purveyor]

Source: Bloomberg

by Sho Chandra
8:30 AM EDT
May 19, 2015

New residential construction in the U.S. surged in April to the highest level in more than seven years, indicating the industry has moved beyond a weather-related soft patch to regain strength.

Housing starts jumped 20.2 percent to a 1.14 million annualized rate, the most since November 2007, from a 944,000 pace in March, a Commerce Department report showed Tuesday in Washington. The median forecast of 83 economists surveyed by Bloomberg was 1.02 million. More permits, a proxy for future construction, were issued than at any time since June 2008.

An improving labor market and mortgage costs close to multiyear lows are reviving residential construction, a sign that the weakness in early 2015 was probably due to harsh winter weather. Builders including PulteGroup Inc. have said the spring selling season is off to a good start, and sentiment data for May showed developers are optimistic about the next six months.

“Housing demand is clearly picking up,” said David Sloan, a senior economist at 4Cast Inc. in New York, whose estimate for the level of starts was the closest in the Bloomberg survey. “Housing should show quite strong momentum over the next few quarters. Permits also suggest solid underlying demand.”

Read more: http://www.bloomberg.com/news/articles/2015-05-19/housing-starts-in-u-s-surge-to-seven-year-high-permits-climb

[forest444]

1. Keep in mind that healthy housing start levels would be at or above 1.5 million units (annualized),

which means we still have a ways to go.

Nevertheless this 20% jump is stellar news from home builders, and among other things suggests access to mortgage credit has substantially recovered. It's worth remembering that housing starts had dropped to around 500,000 in 2009 - the lowest level since World War II.