Florida Virtual Houses

Is home construction activity really up?

May 16th, 2008

Let me quickly dispel any notion that the 8.2% surge in housing starts in April reported by the Commerce Department on May 16 was a positive sign for real estate, or that it has much significance at all.

The rise was fueled by a 40.5% leap in construction starts on multifamily homes of five or more units – a monthly statistic that is notoriously volatile (April’s increase followed a 35% decrease in March and a 24% increase in February).

So let’s focus on the important number. Single-family home starts dropped 1.7% to a seasonally adjusted 692,000 annual rate, another sign that builders are holding back on new projects while they unload unsold homes and wait for a rebound.

Still, the April drop in single-family home starts was the smallest decline since June 2007 when starts fell 0.9%. Single-family home starts decreased 7.7% in November and the rate of decline has been falling ever since. The last time single-family starts increased was in April 2007.

Entry Filed under: News