US seems back on track with rebound in April housing starts

The United States housing sector seems likely to aid the world’s largest economy, with April housing starts showing a strong rebound, as builders speeded up construction of single and multifamily homes, data sources said.

Housing starts rose 6.6 pct in April to a 1.17 million-unit seasonally adjusted annualized rate, signaling a solid momentum to home-building. While the monthly starts numbers can be volatile, homebuilding has clearly had a solid start to 2016. Total starts have risen 10.2 pct on a year-to-date basis, the Commerce Department said on Tuesday.

A Reuters poll of economists had forecasted housing starts rising to a 1.13 million-unit pace last month. The government revised seasonally adjusted housing starts data from January 2014 through March this year. However, the rise in building permits is lagging behind that of starts. This suggests that starts are likely to remain close to their current pace and are unlikely to break out to the upside, Wells Fargo Securities reported.

The boom in the construction industry indicates that the US labor market is growing which will foster employment opportunities for young adults and in turn, bolster household formation.

Single-family starts in the South, where most home building takes place, jumped 9.0 pct to their highest level since December 2007. Single-family starts surged 12.8 pct in the Midwest, but fell in the Northeast and West. Housing starts for the volatile multifamily segment soared 13.9 percent to a 394,000-unit pace.

"With May and June representing the two most important months for housing starts, we remain optimistic about homebuilding in 2016 and the spring selling season," Welles Fargo Securities said in a research note.