Total Housing Starts Rise Slightly in April

The seasonally adjusted annualized rate of building permits let nationwide for new housing construction was little changed from March to April. The annualized rate of 1.634 million units permitted in April 2002 was 0.3% above the revised March total and 0.9% lower than during April 2001.

The permit pace rose slightly in April in three of the four broad regions of the country, declining by 3.1% in the South. From March to April, single-family home permit volume was up 1.6%, while the pace of multifamily work permitted declined by 3.9%. So, on balance, the pace of permit issuance continues at a healthy level, with no sign of robust growth on the horizon, but with volumes holding up relatively well.

The picture isn't quite as bright, however, when the new residential market is viewed from the perspective of housing starts. The annualized pace of total housing starts declined by 5.4% from March to April, after an 8.1% drop the month before. Total starts this April were at a seasonally adjusted annualized pace of 1.555 million units, 5.0% below the level of April 2001.

New single-family homes were started at a rate 2.0% lower in April than during March. And new multifamily construction starts plunged by 18.1%, after a 10.1% gain the month before. Total April 2002 single-family starts (after seasonal adjustment) were 2.5% weaker than in March 2001, and the multifamily sector recorded an over-the-year decline of 14.7%.

During the first four months of this year, total housing starts were estimated to be at a level 3.2% greater than during the first four months of 2001. Although the multifamily sector failed to grow (declining by 4.6% from January-April of last year to the first four months of 2002), starts of single-family homes increased by 5.3%.

The starts pace declined in all regions except the South (+5.6%) from March to April. Also, compared with April 2001, the level of starts this April was lower in all regions except the South (+5.9%). Through the first four months of 2002, total starts were up in the South (+6.5%), Midwest (+1.6%) and West (+0.3%), and down in the Northeast (-3.3%).

Thirty-year fixed-rate mortgages carried an average interest rate of 6.99% this April, marginally lower than the 7.08% average of April 2001. On a monthly average basis, fixed-rate mortgages bottomed out during October of last year at 6.62%. Adjustable-rate mortgages tied to the yield on one-year Treasury bills averaged an interest rate of 4.96% during April 2002, down 10 basis points from the March average and sharply lower than the 6.11% average recorded during April 2001.

Single-family home sales remained healthy through the first four months of this year. After a moderate decline from February to March, home sales came back strong during April. Through the first four months of 2002, overall single-family home sales were running about 6% above the total for January-April 2001.

New single-family home sales (at a seasonally adjusted annualized rate) were estimated to be 1.6% higher in April 2002 than during April 2001 - not bad considering all that has transpired in the U.S. economy during the past 12 months. And April sales were 1.0% better than in March of this year. Despite a disappointing first couple of months this year, new single-family home sales through April 2002 were running a comparatively modest 2.7% behind the total during the first four months of last year. And the median sales price of a new home sold this April was 6.1% greater than in April 2001, so there's still no sign that a market "bubble" is about to burst.

Existing single-family homes sold at an annualized rate of 5.79 million units this April, according to the National Association of Realtors. This pace was 7.0% higher than in the month before, and 9.5% above the April 2001 level. Over-the-month sales growth was strongest in the Northeast and South, while the over-the-year gain was most impressive in the West. The median price of an existing home sold this April was $153,300, while the average price of a resale was $195,700. These prices represented gains of 7.1% and 8.8%, respectively, over the values recorded during April 2001.