Financial News: U.S. Housing Starts Unexpectedly Rebound But Building Perm

U.S. Housing Starts Unexpectedly Rebound But Building Permits Extend Slump

05/17/2023 - 09:17:00 (RTTNews)

(RTTNews) - New residential construction in the U.S. unexpectedly saw a significant rebound in the month of April, according to a report released by the Commerce Department on Wednesday.

The report said housing starts jumped by 2.2 percent to an annual rate of 1.401 million in April after plunging by 4.5 percent to a revised rate of 1.371 million in March.

Economists had expected housing starts to drop to an annual rate of 1.405 million from the 1.420 million originally reported for the previous month.

Single-family housing starts shot up by 1.6 percent to a rate of 846,000, while multi-family housing starts surged by 3.3 percent to a rate of 555,000.

Meanwhile, the Commerce Department said building permits slumped by 1.5 percent to an annual rate of 1.416 million in April after tumbling by 3.0 percent to a revised rate of 1.437 million in March.

Building permits, an indicator of future housing demand, were expected to climb to a rate of 1.430 million from the 1.413 million originally reported for the previous month.

The continued decrease came as multi-family permits plunged by 7.7 percent to a rate of 561,000, more than offsetting a 3.1 percent spike in single-family permits to a rate of 855,000.

"We look for housing starts to slow as the year progresses amid tighter lending standards and the emergence of a recession," said Nancy Vanden Houten, U.S. Lead Economist at Oxford Economics.

On Tuesday, the National Association of Home Builders released a separate report unexpectedly showing a continued improvement in homebuilder confidence in the month of May.

The report said the NAHB/Wells Fargo Housing Market Index jumped to 50 in May from 45 in April. Economists had expected the index to come in unchanged compared to the previous month.

Homebuilder confidence improved for the fifth straight month, with the housing market index reaching its highest level since hitting 55 in July 2022.

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