Housing Starts Surge 11 Percent in April
{{#rendered}} {{/rendered}}
U.S. housing starts (search) surged 11.0 percent in April, topping expectations, as ground-breaking on both single-family and multifamily homes recovered after a plunge in March, a Commerce Department (search) report showed Tuesday.
April housing starts picked up to a 2.038 million unit rate from a downwardly revised 1.836 million unit pace in March as the housing market, buoyed by still-low lending rates, showed few signs of flagging despite a string of interest-rate increases from the Federal Reserve (search) begun last June.
Wall Street economists had expected housing starts to rise by a smaller 7.8 percent in April to a 1.980 million unit rate after tumbling 17.6 percent to the 1.837 million unit pace initially reported for March.
{{#rendered}} {{/rendered}}
Single-family housing starts increased 6.3 percent to a 1.635 million unit rate after falling 14.9 percent to a 1.538 million unit pace in March. Starts on housing with two or more units jumped 35.2 percent in April following a 29 percent drop the previous month.
Permits for future groundbreaking, an indicator of builder confidence, rose 5.3 percent to a 2.129 million unit clip in April. Analysts had forecast permits would edge up just 0.6 percent to a 2.038 million rate from the revised 2.025 million unit rate reported the prior month.
In the U.S. South, groundbreaking soared 25 percent, marking the biggest advance for that region since a 29.5 percent increase in July 1995. Starts rose 6.2 percent in the Midwest and 2.5 percent in the West but fell 17.8 percent in the Northeast, the Commerce Department said.
{{#rendered}} {{/rendered}}
Low mortgage rates have supported the housing sector despite short-term interest rate increases by the Federal Reserve.
The average 30-year fixed-rate mortgage was 5.77 percent in the week ended May 12, up from the previous week but below the 6.34 percent rate seen a year ago, according to mortgage finance company Freddie Mac.
The National Association of Realtors (search) expects fixed, long-term rates to stand at 6.2 percent at the end of 2005 while the Mortgage Bankers Association's (search) chief economist has forecast 30-year fixed rates will rise to 6.5 percent to 6.6 percent.