Housing Starts: April 2001

Total housing starts during April of this year were at a seasonally-adjusted annualized rate of 1.609 million units — still an exceptionally healthy level, given the current state of consumer confidence and anxiety concerning jobs and income. This starts pace was a modest 1.5% above the March level, and only 1.0% below the April 2000 total. Starts of single-family homes rose by a strong 6.7% over the month, but multifamily starts fell by 11.5% during April after soaring the month before.

The annualized starts pace in all regions of the country but the Midwest (-16.7%) rose between March and April. Off a comparatively small base of home building volume (only 11% of the U.S. total), starts in the Northeast region were up by the sharpest amount — 10.6% — over the month. But gains in the much more significant markets of the West (+6.8%) and South (+5.1%) were also impressive.

Fixed-rate mortgages carried an average interest rate of 7.08% this April, up a bit from the 6.95% March average, but sharply lower than the 8.15% rate that prevailed as the first-third of 2000 came to a close. Thanks largely — although certainly not entirely — to a favorable interest rate environment that continues to make housing relatively more affordable as a purchase or investment than other marketplace options — the housing market has thus far been able to sidestep the problems that have plagued most of the other major consumer sectors of the U.S. economy. Some further slowdown is inevitable, however, given the continued downward trend in consumer confidence, the likelihood of higher unemployment and slower job and income gains, and because of the amount of paper wealth that has been dissipated during the severe downturn in equity markets.

The number of building permits issued nationwide fell 2.5% between March and April, but the total number of residential construction permits issued during the first four months of this year was 2.3% greater than over January-April of 2000. Consequently, although we should be prepared for further market weakness over the balance of 2001, there's little chance that we'll see more than a modest slowdown in overall market activity.

Home sales figures weakened considerably during April, after posting very good numbers over the first quarter of this year. New single-family home sales fell to a seasonally adjusted annual rate of 894,000 — a sharp 9.5% drop from the March level. However, sales this April were still 6.0% greater than during the same month of last year, and over the first-third of 2001 total new home sales were 8.3% higher than during January-April of 2000. Existing single-family home sales fell 4.2% between March and April of this year, but remained at an annualized pace 4.4% better than a year ago. April sales for both new and existing single-family homes were lower than during March in all regions of the country, so the slowdown was broadly-based. However, the nationwide inventory of unsold homes on the market remains low by historical standards, so it's unlikely we'll see any prolonged declines in new home building or overall single-family sales.

Building Materials Price Inflation - April

Housing Starts - April

Consumer Confidence by Region - April

New Residential Building Permits by Region - April

Recent Trends in New Residential Permits for 2000's Top 25 Metro Areas