Housing stats driven by multifamily growth

May 16, 2014 07:28 AM

Housing starts rose a whopping 13.2% in April from 947k to a 1.07 million unit pace.

  • The strength was in multifamily starts, which rose nearly 40% to a 423k unit pace.
  • Single-family starts, on the other hand, rose just 0.8% in April from 644,000 to a 649,000 unit pace.
  • Year-over-year, starts are up 26.4%, driven by a 65% rise in multifamily starts. Single-family starts are up 10% over the last 12 months.



Housing starts, year-over-year

Building permits rose in April, up 8.0% from 1.0M to a 1.08M unit pace. Here too the strength was centered on the multifamily realm, up 20% from 400k to a 478k unit pace.

Single-family permits rose 0.3% from 600k to a 602k unit pace.

Year-over-year, permits are up 3.8%, driven by a 14.4% increase in multifamily permits. Single-family permits, on the other hand, are down 3.2% over the past 12 months.

Building permits, year-over-year


Bottom line: Multifamily growth appears to be the driving force in much of the housing market at this point. Yesterday, the NAHB dropped from 46 to 45, the lowest reading since May of last year, suggesting industry insiders are still cautious and remain concerned about the overall stability of the housing market.

Among the concerns, rising home prices, which in many cases are squeezing out potential homebuyers. With prices outpacing consumer wages, and stunting the ability to finance home purchases, many homebuyers are moving into smaller multifamily or rental units. Going forward, in order to continue to foster activity

in the housing market 1) prices will have to cool or 2) lenders will be forced to ease standards. The latter is already in play.

Later this morning, the University of Michigan Consumer Sentiment Index is expected to rise slightly from 84.1 to 84.5 in the preliminary May print.



About the Author

Lindsey is the Chief Economist for Sterne Agee, specializing in the research and analysis of economic trends and activity, world economies, financial markets and fiscal policies. In addition to more than 10 years of experience, Piegza has published several academic papers in journals such as Harvard Business Review as well as in textbooks published by the Kellogg Graduate School of Management. Often quoted in the business press, Piegza is a regular guest on CNBC and Fox Business as well as national radio and other business news outlets.