Analysts at Wells Fargo, explained that the 3.7% slide in housing starts was due to multi-family projects while single-family starts edged higher. They see the housing recovery intact.
“Housing starts fell 3.7 percent in April, essentially reversing a 3.6 percent rise the prior month. While the headline figures might raise some concerns about the spring selling season, builders appear to be quite optimistic. The Wells Fargo/National Association of Homebuilders Index rose to 70 in May and has remained at or above that lofty level for most of this year.”
“Home builders report strong demand for new homes across virtually all price points and in most major markets. This spring’s soft headline numbers are mostly due to volatility in apartment starts, which are showing some signs of topping out.”
“Another major factor holding back housing starts has been the recent volatility in apartment construction. Multi-family starts tumbled 11.3 percent in April, on a seasonally-adjusted basis, falling 50,000 units on an annualized basis to a 393,000-unit pace. The apartment market is showing some signs of topping out.”
“The supply of new homes and apartments will almost assuredly increase in the coming months. The number of single-family homes under construction rose 1.0 percent in April, to 510,000 units, and continues to trend higher. The number of homes in the pipeline still lags considerably behind past building cycles, however. The supply of apartments, on the other hand, appear to be topping out at levels well ahead of the past two cycles.”