Photo: James Bombales
The familiar sounds of swinging hammers and reversing bulldozers were seldom heard during the month of April. Housing starts plunged 30.2 percent from March to a seasonally adjusted annual rate of 891,000 units, the lowest volume since 2015, according to the US Department of Commerce.
Housing starts measure how many homes began construction during a given period and are generally viewed as a key factor in determining market health.
Both single-family and multi-family housing types experienced declines in new construction, falling 25.4 percent and 40.5 percent, respectively. When measured by region, the Northeast saw the slowest pace of total housing starts, slumping 43.6 percent compared to March levels. The West fared similarly, sinking 43.4 percent month-over-month. The coasts have seen stricter stay-at-home measures than other parts of the country, contributing to the slowdown.
Building permits, at a seasonally adjusted annual rate of 1,074,000, were also down across the board. Building permits for single-family homes plummeted 24.3 percent, while those for buildings with five or more units dipped 12.4 percent.
Capital Economics, a UK-based research and consulting firm, published a response to today’s housing market data, noting that the outlook isn’t as bleak as the monthly numbers suggest.
“As the country starts to re-open, single-family starts should therefore recover,” wrote Property Economist Matthew Pointon. “We anticipate starts will average around 900,000 annualised in the fourth quarter of the year. But with lot and labour shortages still acting as constraints, the loss of output in Q2 will not be made-up.”
A recent survey from the National Association of Home Builders mirrored this sentiment, suggesting that builder confidence levels are up and buyer traffic is steadily improving. The volume of weekly mortgage applications also increased 11 percent over last month as more buyers got off the sidelines.