As indicated by the NAHB/Wells Fargo Housing Market Index (HMI), housing starts retreated in April due to the economic consequences of government-imposed lockdowns associated with virus mitigation.
Single-family starts were 25% lower in April, at a seasonally adjusted annual rate of 650,000. Since the peak rate in February, the pace of single-family construction has declined 37%. The April pace was the lowest since the first quarter of 2015.
The April single-family construction data was somewhat better than forecast, and the most recent HMI reading (rising from 30 to 37) suggests improvement in construction during May. Nonetheless, single-family permits were down 24% in April.
As an indication of how strong the start was for single-family construction in 2020, single-family starts on a year-to-date basis are actually 1.3% higher than the comparable 2019 totals (this is also a reflection of the weakness in early 2019 at the end of the interest-rate related housing soft patch).
While single-family starts were down nationwide, the declines were particularly concentrated in the Northeast (66% decline from March) and the West (42% from March).
The multifamily sector, which includes apartment buildings and condos, decreased 40.5% to a 241,000 pace. This reflects an almost 62% decline for multifamily construction relative to the strong January pace at the start of 2020. NAHB’s forecast calls for multifamily construction to decline more than single-family construction during this recession.
In terms of economic impact, there were 532,000 single-family homes under various stages of construction in April. This was down almost 2% from March but was an 11% improvement from the housing soft patch of 2018-2019 last April. There were 669,000 multifamily units under construction in April, a negligible decline from March. But this total is almost 15% higher than April of 2019. These numbers will decline in the months ahead as the starts rate remains at a weaker pace.
