US housing construction increased more than expected in April, and activity last month was stronger than originally thought, suggesting that falling mortgage rates began to provide some support to the striking housing market.
The housing starts increased by 5.7% to a seasonally adjusted annual rate of 1,235 million units last month, driven by gains in the build-up of both single and multi-family homes, the Trade Department said on Thursday. Groundbreaking was also likely to increase with dry weather in the Midwest.
March data was revised to show that housing construction increased to a pace of 1
The government revised the seasonally adjusted data back to January 2014. The unadjusted series will be revised in July.
Building permits rose 0.6% at a rate of 1,296 million units in April. The building laws had fallen for three straight months. One-family residence permits, however, fell for a fifth straight month, suggesting a moderation in housing construction in the coming months.
Economists who were asked by Reuters had expected housing starts to increase to a rate of 1,205 million units in April.
The 30-year flat rate mortgage rate has fallen to 4.10% from a peak of around 4.94% in November, according to data from the mortgage finance firm Freddie Mac. Falling mortgage rates reflect a new decision by the federal bank to suspend its three-year monetary policy campaign.
A survey on Wednesday showed that confidence among homebuilders rose to a seven-month high in May. While lower borrowing costs increase demand, builders said they "continue to cope with ongoing work and lack of shortages and rising material costs that hold back supply and damage affordability."
The housing market has been mired in a soft patch since last year. Investment in residential construction contracted at 2.8% annual interest rate in the first quarter, the fifth quarterly decline.
Single-family house construction, which accounts for the largest share of the housing market, increased 6.2% at a rate of 854,000 units in April. One-family house building increased in the Midwest, which had flooded in previous months. Single family games also began to praise in the Northeast and West, but fell in the south, where the majority of housing construction arose.
Permission to build detached houses dropped 4.2% at a rate of 782,000 units in April.
Starting for the volatile multi-family housing segment by 4.7% to 381,000 units last month. Permits for the construction of multi-family homes recovered 8.9% at a rate of 514,000 units last month.