Headline homebuilding data looked good in April, with total housing starts up 6.6% and single-family starts up 3.3%. Underneath the headlines, however, the news was not favorable.
To start with, the April gains were much smaller than revised March declines. Total starts were originally published at -8.8% in March, but today's data revised that to -9.4%. More significantly, single-family starts in March were revised from -9.2% to -10.9%. So, as seen in the blue line in the accompanying chart, the April gains do not even come close to restoring an uptrend in single-family homebuilding activity.
A month ago, we were more positive on the data than were the markets. While even those March data showed a sharp decline, they were coming off a sharp February increase, and the March softness was just 1 month within a very volatile series.
We have a more sober take than the generally upbeat media comments regarding today's news. With March single-family activity down even more sharply and only a tepid bounce in April, the data are much more indicative of a flat trend in homebuilding than was the case a month ago. This jibes, in turn, with the fact that permits and sales of new homes (green and red lines) have been flat for 6 to 12 months now, respectively. (Meanwhile, multi-family homebuilding construction has clearly been trending lower for over a year.)
Of course, while single-family starts have for the most part been hovering around the 800,000 per year level since December, there is that outsized February print of 850,000. Seeing May starts levels back at 850,000 or higher could restore an uptrend and vindicate the positive media take on today's data. However, a May print of 800,000 or less would support our contention that homebuilding is flattening out. So, there is nothing definitive in today’s data, but we do find more support for our flattening homebuilding story than was the case a month ago.