Housing starts climbed 13.2 percent to a 1.07 million annualized rate following March’s 947,000 pace, the Commerce Department reported today in Washington. Starts exceeded all analysts’ forecasts, with the median estimate of 79 economists surveyed by Bloomberg calling for 980,000.Permits (NHSPATOT) for future projects increased, a sign activity might accelerate in coming months.
A recent drop in borrowing costs and a loosening of credit conditions are poised to lure more buyers into the market and lift demand for builders. Hiring gains also may spur a pickup in residential real estate and help offset a limited availability of lots after unusually harsh weather held back construction at the start of the year.
“With consumer confidence improving, job growth, support from stock markets, credit availability expanding, we’ll start to see that reflected in housing starts numbers and home sales numbers,” Robert Dye, chief economist at Comerica Inc. in Dallas, said before the report. “We’re going to see a little bit more momentum in housing.”
Stock FuturesStock futures were little changed after the report, with the contract on the Standard & Poor’s 500 Index expiring next month declining less than 0.1 percent to 1,866.6 at 8:40 a.m. in New York. The yield on the benchmark 10-year note rose two basis points, or 0.02 percentage point, to 2.51 percent.
Estimates (NHSPSTOT) for starts in the Bloomberg survey ranged from 925,000 to 1.05 million.
Building permits climbed 8 percent to a 1.08 million annualized pace. They were projected to rise to 1.01 million, according to the Bloomberg survey median.
The increase in housing starts was dominated by multifamily construction, such as condominiums and apartment buildings, which increased almost 40 percent to a 423,000 annual rate from 303,000 in March. Work on single-family properties rose 0.8 percent to a 649,000 rate in April from 644,000 the prior month.
Home construction increased in every region except the Northeast. Housing starts jumped 18.2 percent in the South, 7.7 percent in the West, and 1.2 percent in the Midwest. In the Northeast, starts slumped 17.6 percent.
The National Association of Home Builders/Wells Fargo builder sentiment gauge fell to 45 this month, the weakest since May 2013, from a revised 46 in April that was lower than initially reported, figures from the Washington-based group showed today. Readings less than 50 mean fewer respondents report good market conditions. The median forecast in a Bloomberg survey called for 49.
Borrowing costs, which climbed in the second half of 2013, are stabilizing. The average 30-year, fixed-rate mortgage was at a six-month low of 4.21 percent in the week ended May 8, according to data from Freddie Mac in McLean, Virginia. The average from July through December was 4.37 percent.
“For almost all of the country, home values are increasing,” Chief Executive Officer Spencer Rascoff said on a May 7 earnings call. “The rate of growth is slowing, but it’s still a very healthy housing market.”
The latest data from S&P/Case-Shiller in New York showed an index of property prices in 20 U.S. cities increased 12.9 percent from February 2013, the smallest advance since August, after a 13.2 percent gain in the year ended in January. March data are due for release May 27.
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