Housing starts fell 10.6% to an annual rate of 523,000 in April. Construction of single-family homes (-5.1%) and multi-family homes (-24.1%) declined in April. Starts of both total and single-family units (394,000) in April are little different from the cycle low (see Chart 1). Starts of new homes fell in the Northeast (-4.8%) and South (-23%) but advanced in the Midwest (+15.7%) and the West (+3.7%). The large supply of unsold homes and distressed properties continues to hold down construction of new homes.

Permit extensions for construction of new homes -- multi-family (-8.8%) and single-family (-1.8%) - declined in April and this bodes poorly for home construction activity in May. The upshot is that the housing sector continues to present a risk to expectations of economic growth in the quarters ahead.

Asha Bangalore — Senior Vice President and Economist

http://www.northerntrust.com
Asha Bangalore is Vice President and Economist at The Northern Trust Company, Chicago. Prior to joining the bank in 1994, she was Consultant to savings and loan institutions and commercial banks at Financial & Economic Strategies Corporation, Chicago.

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.

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