U.S. housing starts gain in April
Housing starts in the United States surprisingly rose in April, but market watchers say there are some weak numbers behind the headlines.
The U.S. Commerce Department reported that starts last month grew by 8.2 per cent to a seasonally adjusted annual rate of 1.03 million units.
Economists had forecasted that starts would edge down 0.8 per cent to 939,000 units.
The April figures marked a turnaround from March, when building activity hit a 17-year low.
The rise in starts comes as the U.S. housing sector endures a deep slump. The April construction numbers were still 30.6 per cent off from April 2007.
Builders must also contend with weak sales and prices, and a growing number of properties already on the market.
Single-family home construction sector dropped by 1.7 per cent to an annual rate of 692,000 units. The growth in April's building activity was concentrated in the more volatile apartment construction, which rose by 40.5 per cent to a seasonally adjusted annual rate of 326,000 units.
One economist said the underlying trend in the housing sector remains downward, despite April's surprising overall results.
"Unless sales spiked higher in April, which is highly unlikely given recent grim reports from homebuilders, the overhang of new detached homes likely stayed at a 27-year high of 11 months (at the current sales rate), almost double the norm," said BMO Capital Markets economist Sal Guatieri.
"Starts may need to fall towards 800,000, as in previous housing downturns, before the inventory glut is absorbed and prices stabilize," Guatieri said in a commentary.