- U.S. housing starts plunged unexpectedly in April, falling to a record low of 458K units.
- Building permits were also quite weak, declining to 494K.
- Overall, the report was at odds with other U.S. housing market indicators.
U.S. housing starts plunged a further 12.8% M/M to 458K in April, from the upwardly revised 525K (previously reported as 510K) the month before. The drop was in stark contrast to the market consensus for a 520K print and was the lowest level of starts on record. The drop in April means that starts are down a staggering 79.9% from their all-time peak of 2.27 million units reached at the top of the housing bubble in early 2006. On a year ago basis, new residential construction is down 54.2%.
In terms of the details, the declines were all in the volatile multi-units component, which dropped a further 46.1% M/M to 90K (an unbelievably low level of condo construction), while construction of the more stable single-family units rose 2.8% M/M to 368K.
Permit approvals were also weaker on the month, falling by 3.3% M/M to 494K from 511K. Here again, all the declines were in the multi-units component, which declined by 19.9% M/M to 121K, while single-units permit approvals rose 3.6% M/M to 373K.
Overall, this report was a shockingly weak report as the plunge in housing starts was in stark contrast to market expectation, and was broadly at odds with the other housing market indicators that have been pointing to an improved tone in U.S. housing market activity. Notwithstanding, if there is any silver-lining in this report it is that all the weakness (in both starts and permit approvals) were in the volatile condo segment of the market and there is a history of extreme negatives being followed by extreme positives in subsequent months. Nevertheless, with the U.S. labour market continuing to weaken at a fairly dramatic pace and the inventory of unsold homes continuing to weigh heavily on new residential construction activity, a sustained recovery in this segment of the U.S. housing market is unlikely to come for some time.