U.S. home construction jumps in April

May 17, 2016

 

home constructionWASHINGTON — Home construction ramped up in April as housing starts jumped 6.6 percent to a seasonally adjusted annual rate of 1.17 million units, according to the Commerce Department.

The jump comes on the heels of a 9.4 percent drop in March housing starts. The increase in this year’s starts are largely due to a jump in construction of single family houses in the South and Midwest. A low inventory of existing homes for sale has created an incentive for developers to expand supplies through building during a period of low mortgage rates.

Construction has slipped in the West where housing is generally more expensive. That combined with a turbulent stock market has held construction down somewhat.

Housing starts dropped 10 percent in the western states but those losses were offset by 22.2 percent gains in the Midwest, a 14.1 percent increase in the South and a 7.6 percent jump in the Northeast.

Applications for permits to build new homes, an indicator of future activity, rose 3.6 percent in April to an annual rate of 1.12 million.

Despite the gains, the residential market has yet to fully recover from the catastrophic losses during the housing crash and the Great Recession. Home construction remains below its 1.5 million home pace during the 1990s. That is due to both higher housing costs and the damaged financial credit that remains a problem for buyers more than six years after the recession officially ended.

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