Housing starts down, but pace remains strong

Housing starts decreased slightly to a seasonably adjusted annual rate of 1.97 million units in April, the Commerce Department reported May 18.

According to a news release from the National Association of Home Builders, that pace was 2.1 percent below March's revised rate of 2.01 million units, but 20.3 percent above April 2003.

"Builders remain confident about the market as demand for single-family homes and condominiums remains strong, even as mortgage rates begin to edge up," said Bobby Rayburn, president of the National Association of Home Builders, in the release.

According to NAHB Chief Economist David Seiders, momentum in the housing market is as strong as it's ever been.

"Housing starts in March were boosted by an unusual swing in weather conditions, and the April pace actually was above the average for the first quarter ofthe year," Seiders said.

"On the financing front, mortgage rates have risen from their March lows but remain quite favorable on a historical basis. Furthermore, stronger growth in jobs and income is supporting housing demand, and that pattern should continue throughout the year."

Single-family housing starts decreased 0.6 percent to a pace of 1.61 million units for April.

This was an 18.1 percent increase over the April 2003 pace.

Multifamily housing starts decreased 8.4 percent to a seasonally adjusted rate of 359,000 units for the month.

The multifamily pace was 31 percent higher than it was a year ago.

The construction pace for new homes and apartments increased across all regions except the West, where it fell by 13.7 percent.

For the month, issuance of total building permits increased 1.2 percent from March to a seasonably adjusted rate of 2 million units. This was 11.2 percent above April 2003.

Single-family permit issuance decreased by 0.7 percent from the March pace, while multifamily permits issued were up 8.3 percent.

"Buyer demand is strong, inventories of unsold houses are lean, and there's a sizeable backlog of unused building permits," said Seiders.

"This bodes well for housing production in the coming months."