New residential construction in the U.S. showed a significant increase in the month of April, according to a report released by the Commerce Department on Friday, with housing starts jumping to their highest level in five months.
The report said housing starts surged up 13.2 percent to an annual rate of 1.072 million in April from the revised March estimate of 947,000.
Economists had expected housing starts to climb to a rate of 980,000 from the 946,000 originally reported for the previous week.
With the bigger than expected increase, housing starts rose to their highest level since reaching an annual rate of 1.105 million last November.
The increase in housing starts was largely due to a jump in multi-family starts, which surged up almost 40 percent to an annual rate of 423,000 in April from 303,000 in March.
Single-family housing starts showed a much more modest increase, edging up 0.8 percent to a rate of 649,000 in April from 644,000 in March.
The Commerce Department also said building permits, an indicator of future housing demand, jumped 8.0 percent to an annual rate of 1.080 million in April from the revised March rate of 1.0 million.
Multi-family permits soared 19.5 percent to a rate of 478,000 in April from 400,000 in March, while single-family permits ticked up 0.3 percent to a rate of 602,000 from 600,000.
Compared to the same month a year ago, housing starts were up by 26.4 percent in April. Building permits saw a more modest 3.8 percent year-over-year increase.
Teunis Brosens, Senior Economist at ING Bank, said, "We expect the housing market to show further signs of stabilization in the coming months."
"The housing market may not be the buoyant growth engine that it was last year, but we do not expect it to provide credible reason for the Fed to delay tapering or postpone interest rate hikes either," he added.
On Thursday, the National Association of Home Builders released a separate report showing that homebuilder confidence has unexpectedly deteriorated in the month of May.
The report showed that the NAHB/Wells Fargo Housing Market Index edged down to 45 in May from a revised 46 in April. The drop surprised economists, who had expected the index to climb to a reading of 49 from the 47 originally reported for the previous month.
With the unexpected decrease, the Housing Market Index dropped to its lowest level since hitting 44 in May of 2013.
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