Both the number of permits issued to build privately-owned housing units and the number of units for which construction started were up in April although still lagging considerably below figures for April 2007.
According to a joint report issued by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, building permits were issued at a seasonally adjusted annual rate of 978,000. This is a 4.9 percent increase over the revised March figure of 932,000 starts but is 34.3 percent below the April 2007 estimate of 1,489,000 permits.
Single-family permits were up 4.0 percent to an annualized rate of 646,000.
The rate of housing starts during April was 8.2 percent higher than in March. April's rate was 1,032,000 and the revised March estimate was 954,000. The April figure, however, is 30.6 percent lower than the revised April 2007 rate of 1,487,000.
Larger scale buildings were a strong factor in April. Permits for buildings containing five or more units were up 7.3 percent over March and were running 16.0 percent below figures for the same month in 2007 while single-family permits were down 40.1 percent for the same period. Starts of multi-unit buildings were 40.5 percent higher than last month and 28.9 percent higher than one year ago.
Home builders, however, continue to take a dim view of the market according to the May National Association of Home Builders/Wells Fargo Housing Market Index released on Thursday. The Index fell one point in May to 19, bringing it within one point of the record low number it hit in December 2007.
The HMI is determined through a monthly survey by the National Association of Home Builders (NAHB) of its members wherein builders are asked to rank market conditions along three planes ' current home sales, sales expectations for the next six months (using the measures of good, fair, and poor;) and current buyer traffic as either "high to very high," "average," or "low to very low." Scores are assigned to each of the three questions and used to construct an overall score. Any score over 50 on the main HMI or any of its components indicate that more builders view conditions as positive rather than negative.
"Despite the Federal Reserve's concerted efforts to lower short-term interest rates, free up credit markets and shore up the national economy, the housing market has shown no evidence of improvement thus far. In fact, conditions have continued to deteriorate in recent times," said NAHB Chief Economist David Seiders. "The latest HMI shows that even fewer builders now foresee market conditions improving over the next six months compared with our April survey, and builder ratings of buyer traffic through model homes also have dropped off over the past month on a seasonally adjusted basis. This certainly adds fuel to the argument that targeted policy stimulus, in the form of a temporary tax credit for home buyers, is essential to halt the housing downswing and remove the heavy drag being exerted by housing on overall economic growth."
Both the House and Senate have approved bills creating a temporary home buyer tax credit of up to $7,500 for qualified buyers, but the legislation has yet be crafted into a comprehensive bill that can be sent to President Bush for his signature.
The portion of the HMI measuring current sales conditions declined one point to 17 in May ' its lowest level since the series began in January 1985. Meanwhile, the component gauging sales expectations for the next six months declined three points to 27, and the component gauging traffic of prospective buyers declined two points to 17.