Steel Markets

Housing Starts Improve, But Permits Lackluster

May 16, 2019

Housing starts jumped 5.7 percent in April to a seasonally adjusted annual rate of 1,235,000, said the Department of Commerce in its latest report. Single-family starts led the way with a 6.2 percent increase, while homes of five units or more increased 2.3 percent. Starts soared by 84.6 percent in the Northeast and 42 percent in the Midwest, but declined by just over 5 percent in the South and West.

Permit authorizations increased less than 1 percent in April. Permits were at a SAAR of 1,296,000, a 0.6 percent increase from March, but were 5.0 percent below the April 2018 level. Single-family permit authorizations declined 4.2 percent from March to 782,000, while multi-family permits of five units or more jumped 7.1 percent. Permit authorizations fell in the Northeast and South, but increased 2.2 percent in the Midwest and 5.3 percent in the West.

“Though an overall encouraging report for the month of April, the soft permit numbers for single-family housing indicate concerns about housing affordability and construction costs,” said National Association of Home Builders chief economist Robert Dietz. “Builders continue to focus on managing home construction costs as they try to meet growing housing demand. NAHB analysis of first-quarter permit data show growth in more affordable exurban locations.”

Builder confidence for newly built single-family homes, as measured by the NAHB, was at its highest level since October 2018. The Index rose 3 points to 66 in May on the Home Builders/Wells Fargo Housing Market Index (HMI).

“Builders remain cautious due to affordability concerns,” said NAHB Chairman Greg Ugalde. “But as our builder confidence survey shows, their expectations indicate consumers will respond to lower interest rates moving forward and the housing market will continue on a slow, steady climb.”