US housing starts rebounds in April, GDP growth likely to accelerate above 2% mark in Q2 2016

In April, US housing starts rose 73k units to 1,712k, surpassing forecasts of a modest increase to 1,125k. Data for the prior two months was revised, adding further 29k units to the overall figure. Multifamily segment recorded most of the gain of 48k; however, the rate of single-family construction also grew strongly by 25k.

Approvals for building were marginally short of projections; however the headline figure recorded a strong number of 1116k, rising by 39k units. Both single-family and multifamily segments recorded a rise on the month, climbing 11k and 28k respectively. The Midwest and South regions gained by 34k and 76k respectively. However, the gains were slightly countered by a decline in the Northeast and West regions.

The US housing starts data for April was quite positive. The recovery in construction underpins the view that the US homebuilding is on “a modestly positive course”, said TD Economics in a research report. April’s data also supports the view that the weak report was possibly an abnormality where unusual warm winter weather pulled activity towards earlier months, added TD Economics. The pickup in April augurs well for a wider recovery in consumer spending and domestic demand in Q2 2016.

“Taken together, these are all supportive of our second quarter growth outlook which suggests real GDP should bounce back above the 2.0% mark”, said TD Economics.