US housing starts fall to five-month low

US housebuilding unexpectedly fell in April to the lowest level in five months amid persistent weakness in the construction of multi-family housing units, suggesting a slowdown in the housing market recovery.

Housing starts dropped 2.6 per cent to a seasonally adjusted annual rate of 1.17 million units also as single-family housebuilding rebounded modestly, the commerce department said on Tuesday. April’s reading was the lowest level since last November and followed a downwardly revised rate of 1.2 million units in March.

The weakness in residential construction will probably do little to change the view that economic activity picked up by early in the second quarter. Gross domestic product increased at a pedestrian 0.7 per cent annualised rate in the first three months of 2017.

Labour market

Demand for housing remains underpinned by a tightening labour market, characterised by an unemployment rate at a 10-year low of 4.4 per cent. A survey on Monday showed housebuilders’ confidence rose in May, with bullishness about current sales and those over the next six months.

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Single-family housebuilding, which accounts for the largest share of the residential housing market, rose 0.4 per cent to a pace of 835,000 units last month. That left the bulk of the 5.1 per cent decline in March intact.

Single-family starts surged 19.4 per cent in the midwest and advanced 9.1 per cent in the west. They fell 3.4 per cent in the south and tumbled 29.2 per cent in the northeast to their lowest level since June 2015.

Housebuilders are failing to take advantage of a chronic shortage of properties for sale amid complaints about expensive building materials and shortages of lots and labour.

Some of the drop in starts could be weather-related – parts of the US experienced snowstorms in March and heavy rains in April. – (Reuters)