STABILITY SIGNS: Analysts caution optimism and warn upswing may be statistical fluke
VERONICA SMITHAFP
Province
WASHINGTON — U.S. homebuilding showed a surprisingly strong jump in April, signaling a ray of hope amid the rubble of the worst housing slump in decades, according to government data released Friday.
Housing starts and permits hit their highest levels since February, and new home construction rebounded from a 17-year low in March, the Commerce Department data showed.
Starts rose 8.2 per cent in April from March to an annual rate of 1.032 million units. It was the strongest gain since January 2006 and sharply higher than analysts’ consensus forecast for a cutback to 940,000 units.
Construction permits, a bellwether of future activity in the housing sector, climbed a robust 4.9 per cent in April to 978,000 units. That, too, soundly topped analyst expectations of 912,000 units.
Analysts said the data was an encouraging sign that the housing market finally may be starting to stabilize after the collapse of a real-estate bubble in 2006.
With the housing slump at the root of the economy’s slowdown, finding a floor could give the Federal Reserve more room to pause in its recent interest rateslashing campaign.
But analysts cautioned that any improvement was starting from relatively depressed levels.
“Construction activity has been so low that it has no place but up to go and that might just be happening,” said Joel Naroff of Naroff Economic Advisors.
Global Insight’s Brian Bethune took a slightly dimmer view, arguing that most of April’s upward momentum was probably due to statistical flukes.
“We would not read too much into the April housing report beyond statistical noise,” he said.
“It is definitely too early to uncork the champagne on the long and winding road to more healthy housing market conditions.”
On a 12-month gauge of the slump, April housing starts were down 30.6 per cent and permits fell 34.3 per cent.
The Commerce Department upwardly revised March housing starts to 954,000 units, from a prior estimate of 947,000, and construction permits to 932,000, from a 927,000-unit rate.