Highlights

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.

Key Factors

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.

Category	APR	MAR	FEB	JAN	DEC
Starts	853K	1021K	969K	898K	983K
1 Unit	610K	623K	652K	614K	620K
Multi Units	243K	398K	317K	284K	363K
Permits	1017K	890K	952K	915K	943K