The US Commerce Department gave the housing sector a much-needed shot in the arm on Wednesday with a report that housing starts surged in April, suggesting improvement in the sector that has lagged behind the rest of the economy to recover after the recession. The agency reported that starts increased 2.6 percent from an upwardly revised figure for March, to a seasonally adjusted annualized pace of 717,000 homes a year, just below a three-year high pace of 720,000 seen in January.
The report also showed a decline in building permits, seen as an indicator of future construction, but analysts were quick to point out that most of that decline was because of a 23 percent drop in permits for the volatile multifamily sector, which fluctuates wildly sometimes from one month to the next. In addition, the drop came after permits reached a 3 and a half year high in March. Actual construction projects started in April rose in both the single-family and multifamily sectors.
Even with April's stout gains in home construction, the industry is still building at roughly half of the pace it was seeing before the recession brought havoc to all areas of the economy. Nearly five years since the housing bubble burst, the US housing market is still weak in almost every measurable way, but recent improvements have some economists predicting good things for the first time since the recession ended. Also this week, the National Association of Home Builders reported that builder confidence increased again this month, rising to its highest level in five years.