New U.S. Housing Construction in April Exceeds Forecasts

Builders in the U.S. broke ground on more homes than anticipated in April, indicating the residential real estate industry is stabilizing. Starts rose 2.6 percent to a 717,000 annual rate from March’s revised 699,000 pace that was stronger than previously reported, Commerce Department figures showed today in Washington. The median estimate of 80 economists surveyed by Bloomberg News called for a rise to 685,000. Building permits, a proxy for future construction, fell from a more than three-year high. Employment gains, cheaper homes and record-low mortgage rates are combining to lift demand and encourage builders to take on projects. At the same time, distressed properties are thwarting a quicker recovery in the housing market three years after the end of the recession it helped trigger. “We’re at a point where we see more light and less tunnel,” said Michael Gapen, a senior U.S. economist at Barclays Capital in New York. “Residential construction is no longer a drag on the economy and will contribute to growth.” Estimates in the Bloomberg survey for April ranged from 641,000 to 730,000. The prior month was revised from 654,000. Today’s report reflects revisions dating back to January 2010. Stock-index futures maintained gains after the figures, with the contract on the Standard & Poor’s 500 Index expiring next month rising 0.6 percent to 1,335.9 at 8:32 a.m. in New York. Permits decreased 7 percent to a 715,000 annual pace last month from 769,000 in March, which was the fastest since September 2008, today’s report showed. March was revised from a previously reported 764,000 pace.