A government survey measuring new residential construction came in much weaker than forecasts on Tuesday, as plans to build multiple-unit condos plummeted in April.
Housing starts ― plans for building new homes ― fell dramatically by 12.8% in April to an annualized pace of 458,000. Forecasts had ranged between 500k and 560k, with the consensus view looking for an advance to 523k. In the past year, housing starts have now plummeted 54.2%.
Single-family starts actually rose 2.8% in the month to 368,000, but multiple-unit starts fell 42.2% to an annualized pace of 78,000.
“The April Starts report is positive to the view that the single family housing market is bottoming, yet the multi-family condo/coop market is hard landing, rapidly erasing its imbalance,” said John Herrmann, president of Herrmann Forecasting.
“These adjustments should hasten the housing market correction over the final 8-months of 2009, enabling these markets to bottom out (possibly in 2010),” he added.
The story was much the same for Building Permits ― a forward-looking measure that anticipates housing starts by one or two months. Permits fell 3.3% in April to an annualized pace of 494,000 units, well below the consensus call for an uptick to 530k.
Compared to one year ago, housing permits are down 50.2%. Single-family permits rose 3.6% in the month to 373,000, while permits for multiple-units fell 21.4% to 103,000.
Just prior to the release, Michael Gregory at BMO Capital Markets accurately predicted the release could fall below expectations due to bad weather in April.
“Nevertheless, allowing for a weather-related rebound in May, recent results should mark the lows for starts and permits amid this worst housing recession in the post-WWII period,” he said, noting that the NAHB survey of homebuilder sentiment ticked up two points on Monday.