April Housing Data: Starts Dip, But Industry Trend Remains Strong

By at 18 May, 2021, 11:55 am


Housing starts fell more than expected in April, according to the latest report from the U.S. Census Bureau.

Privately‐owned housing starts came in at a seasonally adjusted annual rate of 1,569,000 in April, which was down by 9.5 percent compared to the revised March estimate of 1,733,000. However, it must be noted that the March level was the highest since June 2006.

As for building permits – a measure of future housing starts – they came in at a seasonally adjusted annual rate of 1,760,000, which was up ever so slightly from the March rate of 1,755,000.

Housing data is volatile month-to-month, but as noted in the two following charts, the strength of the recovery in housing – in particular, single-family units – after the pandemic initially hit last year has been striking.

Source: Federal Reserve Bank of St. Louis, FRED

Source: Federal Reserve Bank of St. Louis, FRED

Three additional points are worth keeping in mind regarding housing numbers.

First, the decline in March starts was tied to shortages and soaring prices of lumber and other materials.

Second, housing construction is all about small business. According to the latest U.S. Census Bureau data, 97.5 percent of employer firms in residential building construction have fewer than 20 employees.

Finally, the fact that housing has rebounded strongly seems to point to a long-run confidence in the economy among Americans. As long as government doesn’t do anything to derail such confidence – such as imposing increased taxes and regulations – that’s good news as we look ahead.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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