April Housing Starts Result is Deceiving

Posted by Louis Navellier on 5/16/08 9:57 am

Judging by all the commotion on television this morning about a “rebound” in the housing market, I think it’s safe to say that a lot of people failed to read past the headlines.  Yes, housing starts rocketed 8.2% in April, but the result was deceptive, so don’t gets your hopes up that the housing market finally hit a bottom.

Ian Shepherdson at High Frequency Economics summed it up well in an email this morning.

“April housing starts jumped 8.2% to 1.032M, well above the consensus 940K but in line with our forecast. The headline increase in starts means nothing; it is all due to a rebound in the hugely volatile, but essentially trendless, multi-family sector, where starts plunged 35.1% in March and then jumped 36.0% in April. Almost every time multi-family starts drop sharply they rebound the next month; we don’t understand why the consensus view failed to take this into account. Much more important is the single-family sector, where starts dipped 1.7% to a new low of 0.692M. Single-family permits rose 4.0%, though, the first increase since March last year. One good month is not a recovery though, especially given Easter seasonal problems. Listen to the builders; NAHB survey yesterday was hideous.”

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