U.S. home building grew in April, the latest sign that the recovery may be strengthening in the long-struggling market.
Home construction increased 2.6% from March to a seasonally adjusted annual rate of 717,000, the Commerce Department said Wednesday. Year-over-year, starts were up nearly 30%.
Economists surveyed by Dow Jones Newswires had forecast April's housing starts would grow to a seasonally adjusted annual rate of 685,000. That would have been a 4.7% jump from the prior month's previously reported figures. March starts, however, were revised significantly upward to a rate of 699,000 starts from a previously reported 654,000. The newly stated data reflects a 2.6% decline from February.
Construction of single-family homes, which made up 69% of housing starts last month, grew 2.3% in April and was up 18.8% from a year ago. Meanwhile, multifamily homes with at least two units increased by 3.2% in April.
In a speech Tuesday, Federal Reserve governor Elizabeth Duke cited several positive signs for the housing market, including stabilization in home prices and a decline in newly delinquent borrowers. In addition, she said that readings of housing construction activity have been "somewhat encouraging" as housing starts and building permits have increased from the depths of the bust.
This year's home construction figures, while up from a low of 478,000 in April 2009, are still well below the historical average. Builders have started construction on about 1.5 million new homes per year since 1959.
The number of new housing permits, an indication of future construction, fell by 7.0% to annualized level of 715,000 in April after reaching 769,000 the prior month, the highest rate since September 2008. Economists had forecast permits to drop to 730,000.
Still, builders' confidence in the market is growing. The National Association of Home Builders' May housing market index, released Tuesday, reached the highest level in five years as more potential buyers appeared confident that the housing market has hit bottom. The Commerce data showed that new building was mixed across four U.S. regions. Starts were up 11.6% in the South and grew 6.7% in the Midwest. Starts fell by 20.7% in the
Northeast and were down 8.1% in the West. Actual housing starts, calculated without seasonal adjustments, increased to 64,200 in April from an upwardly revised 57,400 in March. Lumber and commodities markets watch those numbers closely to gauge demand.