Updated: 19-May-09 09:06 ET

April Housing Starts

Updated: 19-May-09 09:06 ET

Highlights

• Starts fell -12.8% from March to an annualized rate of 458K units (consensus 520K) while permits dropped -3.3% to an annualized rate of 494K (consensus 530K). The prior month's report saw starts revised slightly higher to 525K (from 510K) and permits revised slightly lower to 511K (from 516K).
• The April numbers for starts and permits are both record lows.

Key Factors

• The housing starts and building permits data were awful economically speaking.
• The only upside from the April data is that the reduced level of starts and permits means there will be less competition for existing homes currently on the market.  Still, with the glut of unsold homes, any new starts are just going to extend the recovery process.

Big Picture

• Housing starts are at extremely low levels and the outlook is not likely to improve any time soon due to high levels of inventories of unsold new homes.  An uptrend in consturction will require an improvement in employment and income, and then take some time as inventories need to be reduced.  Government action to boost mortgage lending may also help, and starts might stabilize in the second half of the year.