Housing starts blew the doors of the consensus range today. Housing starts for April 2015 came in at 1.135 million. The consensus range was 0.970 million to 1.120 million.
The official spring housing surge is upon us. Housing starts soared +20.2% in April. This is one of the strongest moves higher on record! This is the best housing starts number in 7 1/2 years!
It’s not just all in multi-family (apartments) either. Remember the Bear argument over the last few years that nobody can afford a house and so they are all moving into apartments? The strength in starts is split between single-family, up +16.7%, and multi-family up +27.2%.
That was the highest reading since November 2007, and the biggest percentage increase since February 1991. New applications for building permits, a bellwether for construction in coming months, increased 10.1%.Source: www.wsj.com
I stress against getting too excited about this one housing starts report though. Notice that the chart above is basically sideways action. Yes, the percentage gain was awesome but it’s coming off of a seasonal cycle low. Also, one economic report does not make an economy. Nevertheless, housing data is used in the calculation of the GDPNow forecast.
Housing has a ripple effect throughout the U.S. economy and therefore your investments.
Home builders usually don’t start a house unless they are fairly confident it will sell when they are done building it. When a new home is started, construction employment rises, and income will be pumped back into the economy. Once the home is sold, it generates revenues for the home builder. Home buyers often purchase refrigerators, washers and dryers, and furniture.