Housing Starts: More Weather Issues Hamper Supply

Bottom Line: Housing starts fell more than expected in April, and there were negative revisions to March. Still, looking at 3-month averages relative to 6- and 12-month averages, the trend in housing starts remains modestly positive, despite the weather-related volatility in the last two months. Additionally, much of the decline in the last two months was in the volatile multifamily sector. Finally, permits were lower for single-family homes -- but amid bad weather and anecdotal evidence of a shortage of construction workers in many markets, we suspect this is more indicative of continued modest supply growth rather than any indication of lower housing demand going forward. Housing Starts FELL by 2.6% in April to 1172k, compared with market expectations for an increase to 1250k. Meanwhile, the prior month was revised slightly lower from 1,215k to 1,203k. Housing starts had been slowly climbing, albeit amid substantial volatility, since reaching their cyclical nadir in April 2009 However, they are now 0.7% ABOVE their year ago level. And they are still a sharp 48.4% BELOW their January 2006 peak. Single Family Housing Starts ROSE by 0.4% to 835k. Single family housing starts are 8.9% ABOVE their year ago level but still 54.2% BELOW their January 2006 peak. Multifamily Housing Starts FELL by 9.2% to 337k. Multifamily starts are now 15.1% BELOW their year ago level.