Housing starts in the U.S. came in well above estimates in the month of April, according to a report released by the Commerce Department on Wednesday, although the report also showed a sharp drop in building permits.
The report showed that housing starts rose 2.6 percent to an annual rate of 717,000 in April from the revised March estimate of 699,000. Economists had expected housing starts to increase to 690,000 from the 654,000 originally reported for the previous month.
The increase in housing starts was partly due to a 2.3 percent increase in single-family housing starts, which rose to a rate of 492,000 in April from 481,000 in March.
The rate for units in buildings with five units or more was 217,000 in April, up 4.3 percent from 208,000 in the previous month.
An 11.6 percent increase in housing starts in the South also contributed to the growth along with a 6.7 percent increase in starts in the Midwest.
On the other hand, housing starts in the West fell by 8.1 percent and housing starts in the Northeast plummeted by 20.7 percent.
The Commerce Department also said that building permits fell 7.0 percent to an annual rate of 715,000 in April from the revised March rate of 769,000.
Building permits, which are seen as an indicator of future housing demand, had been expected to drop to 725,000 from the 747,000 originally reported for March.
"However, one could make the case that permits rose in four of the past six months, and the latest drop is off of March's near 4-year high," said Jennifer Lee, senior economist at BMO Capital Markets.
The National Association of Home Builders released a separate report on Tuesday showing that its reading on homebuilder confidence reached a five-year high in May.
The report showed that the NAHB/Wells Fargo Housing Market Index jumped to 29 in May from a downwardly revised 24 in April. Economists had expected the index to edge up to 26 from the 25 originally reported for the previous month.
With the much bigger than expected increase, the index rose to its highest level since coming in at 30 in May of 2007.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.