Last Update: 16-May-13 09:03 ET
- Housing starts fell 16.5% in April to 853,000 from a downwardly revised 1.021 mln (from 1.036 mln) in March. That was the smallest number of starts since November 2012. The Briefing.com consensus expected housing starts to fall to 970,000.
- There is no doubt that the sizable drop in the starts number is a discouraging headline. However, the details of the drop do not change our assessment that construction growth is on a firm upward trend.
- In fact, the decline in starts will likely not have a negative impact on our GDP forecast. The number of homes under construction, which factors directly into GDP, increased by 1.9% to 605,000 in April from 594,000. More importantly, most of the gain came from the single-family sector, which contributes more per month to residential investment than homes under construction in the multifamily sector.
- Single-family starts fell to 610,000 in April from 623,000 in March. That was the lowest number of new starts since November.
- Multifamily construction, which tends to be highly volatile, fell to 243,000 in April from 398,000 in March. The drop is likely a reversion to the mean as multifamily construction has been running much hotter than its 12-month average.
- The drop in new housing starts in April was a reversion to the mean following an unsustainable surge in multifamily construction in March.