While the Commerce Department released a report on Thursday showing that U.S. housing starts fell by much more than anticipated in the month of April, the report also showed a substantial increase in building permits.
The Commerce Department said housing starts tumbled 16.5 percent to a seasonally adjusted annual rate of 853,000 in April from the revised March estimate of 1.021 million.
Economists had expected housing starts to drop to an annual rate of 969,000 from the 1.036 million originally reported for the previous month.
The bigger than expected pullback by housing starts came after starts reached their highest level since June of 2008 in March.
Housing starts in the South showed a notable decrease, tumbling by 27.9 percent. While starts in the Northeast and the West also fell by 12.8 percent and 6.2 percent, starts in the Midwest rose by 10.9 percent.
The report also showed that single-family housing starts dipped 2.1 percent to 610,000, while multi-family housing starts tumbled 38.9 percent to 243,000.
On the other hand, the Commerce Department said building permits, an indicator of future housing demand, jumped 14.3 percent to an annual rate of 1.017 million in April from the revised March rate of 890,000.
Building permits had been expected to climb to an annual rate of 945,000 from the 902,000 originally reported for the previous month.
The report showed that building permits for single-family homes rose 3.0 percent, while building permits for multi-family homes surged up by 37.5 percent.
Mei Li, an economic analyst at FTN Financial, said, "Stirred by volatile multi-unit starts, housing starts are experiencing an adjustment after two months of solid gains,"
"But the good news is that building permits surpassed housing starts in growth again, and should lead housing starts out of the slump," she added.
On Wednesday, the National Association of Home Builders released a report showing a bigger than expected improvement in homebuilder confidence in the month of May.
The report showed that the NAHB/Wells Fargo Housing Market Index climbed to 44 in May from a downwardly revised 41 in April. Economists had expected the index to rise to 43.
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