American builders ramped up home construction for the third-straight month in April, a sign the industry sees growth ahead after a weak winter.
US housing starts rose 13.2 per cent in April to a seasonally adjusted annual pace of 1.07 million, the Commerce Department said Friday. The increase was fueled by a by a big jump in multi-family homes. Construction of single-family homes was up only 0.8 per cent.
The figures for overall housing starts were the strongest in five months and show that a crucial piece of the economy is improving after taking a dip over the winter.
Compared with a year earlier, housing starts were up 26.4 per cent. New applications for building permits, a bellwether of future construction, grew 8 per cent in April from the prior month to a pace of 1.08m.
The results were better than expected. Economists surveyed by The Wall Street Journal had projected starts would rise 3.1 per cent to a pace of 975,000 in March and expected permits would grow to a pace of 1.01m.
The pace of construction for March was revised lower, showing a 2 per cent gain from the previous month, compared with an initially reported 2.8 per cent increase.
The results signal that builders foresee improved prospects after coping with a soft market so far this year. Sales of newly built homes fell 14.5 per cent in March to the lowest level since last July, after stormy winter weather slowed down construction.
The pickup in construction was driven by growth in construction of multifamily homes, including apartments and condos. Starts of multifamily homes with at least five units were up by nearly 43 per cent. That sector is particularly volatile and often doesn't reflect underlying demand in the market.
After fueling the economy earlier in the US recovery, the housing market has struggled to regain momentum since last summer. Higher interest rates coupled with a run-up in home prices have priced out many prospective home buyers, damping overall demand.
Builders have been growing more pessimistic as a result. The National Association of Home Builders reported Thursday that builders' confidence in the market for single-family homes fell to the lowest level in 12 months.
Prices also have been rising, making it hard for first-time buyers to afford a new home. The median price of a new home rose to $US290,000 ($A309,700) in March, the highest level on record, according to the Commerce Department.
The average rate on a 30-year, fixed-rate mortgage fell to 4.20 per cent this week, a six-month low, but rates were still well above last year's average of 3.51 per cent, mortgage-finance company Freddie Mac said Thursday.
Still, many in the housing industry and outside economists believe the market will recover, albeit at a slower pace than other parts of the economy.
Confidence re-emerging after a cold winter for American builders.
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