By Sho Chandra for Bloomberg
New residential construction in the U.S. surged in April to the highest level in more than seven years, indicating the industry has moved beyond a weather-related soft patch to regain strength.
Housing starts jumped 20.2 percent to a 1.14 million annualized rate, the most since November 2007, from a 944,000 pace in March, a Commerce Department report showed Tuesday in Washington. The median forecast of 83 economists surveyed by Bloomberg was 1.02 million. More permits, a proxy for future construction, were issued than at any time since June 2008.
An improving labor market and mortgage costs close to multiyear lows are reviving residential construction, a sign that the weakness in early 2015 was probably due to harsh winter weather. Builders including PulteGroup have said the spring selling season is off to a good start, and sentiment data for May showed developers are optimistic about the next six months.
“Housing demand is clearly picking up,” said David Sloan, a senior economist at 4Cast in New York, whose estimate for the level of starts was the closest in the Bloomberg survey. “Housing should show quite strong momentum over the next few quarters. Permits also suggest solid underlying demand.”
In other good news for housing, Home Depot posted first-quarter profit that topped analysts’ estimates during the retailer’s most important selling season. Rising property prices and the early arrival of warm weather spurred Americans to work on their homes’ exteriors. The spring is Home Depot’s biggest revenue generator -- even more important than Christmas.
Estimates for housing starts in the Bloomberg survey of economists ranged from 955,000 to 1.2 million. The prior month’s pace was previously reported as 926,000.
Last month’s 20.2 percent jump in starts was the biggest since February 1991. Construction slumped 16.7 percent in February as harsh weather prevent developers from starting new projects.
The surge in housing starts last month was paced by single-family projects in the West and multifamily in the Northeast, pointing to broad-based gains in the industry.
Construction of single-family houses in all the U.S. jumped 16.7 percent to a 733,000 rate, the most since January 2008.
Work on multifamily homes, such as townhouses and apartment buildings, climbed 27.2 percent to an annual rate of 402,000.
Three of four regions showed gains, led by the Northeast and West. The South was the only area with a decline.
From Wells Fargo Economics Group
The housing data remain confounding. Demand appears to be improving, but various reports on the market continue to give off conflicting signals. Existing home sales fell 3.3 percent in April to a still respectable 5.04 million unit pace.
The drop follows three months of strong gains in pending home sales, which represent purchase contracts for existing homes, and a steady improvement in mortgage applications to finance the purchase of a home. Demand has clearly perked up and realtors, mortgage lenders and homebuilders are all relatively upbeat.
Although the monthly home sales figures are volatile, the latest drop is eye catching because of its timing. April marks the start of the important spring home buying season and this year the housing market appears to have the wind at its back, with demand improving and mortgage rates remaining low.
Demand has clearly increased, but many buyers are having difficulty finding a home to buy due to the lack of available inventory. Bidding wars for homes have erupted all over the country, and with little new home supply in the pipeline, prices are likely to remain relatively firm for some time to come. A bigger mystery is why so few homeowners have been willing to put their homes on the market.
The median home price rose 8.9 percent over the past year to $219,400. This marks the 38th consecutive month of year-to-year price increases and the largest gain since January 2014. Prices for condominiums and co-ops were up a modest 0.4 percent, while the median price of an existing single-family home jumped 10 percent to $221,200.
Homes are selling quickly. The National Association of Realtors (NAR) noted that homes tended to sell in just 39 days, which was faster than any other month since July 2013 and marks the second shortest time homes have remained on the market since the NAR began tracking this statistic back in 2011.
Moreover, the NAR notes that close to 40 percent of the homes sold in April were sold at or above their asking price. Clearly, it is a sellers’ market today and hopefully that will draw more sellers out into the market later this year.
The lack of inventories and low levels of new construction mean that home prices will likely remain firm. Higher home prices will not make it any easier to bring first-time homebuyers back into the market. First-time buyers accounted for just 30 percent of home buyers in April, which was the same as in March and up from just 29 percent last April.
Source: NAR, U.S. Department of Commerce, FHFA, S&P Case-Shiller and Wells Fargo Securities
The Sunbrella fabrics design team is emphasizing design simplicity with new bright colors and neutral additions to the Sunbrella Upholstery Collection. The additions include seven fabric groupings drawing attention to vibrant colors and patterns as well as textural neutrals.
“Our design team has incredible insights on colors, patterns and textures for today’s homes,” said Greg Voorhis, Design director for Glen Raven Custom Fabrics, the maker of Sunbrella fabrics. “With these new additions we’re mixing two different ends of the spectrum – bright to muted, old to new – and how they can come together to create beautiful, unassuming design.”
The Stripes group features classic stripe patterns Cabana and Shore in a variety of bold, bright colors that pop when mixed and matched as decorative pillows on white upholstery.
The Wisteria group evokes the feeling of spring through delicate shifts in color and texture. Featuring soft lavender and goldenrod stripes on a beige background, Paris Lavender feels vintage and well worn, and Meander Lilac features rich lilac tones in an interlocking pattern.
The group Regatta transforms any room into a seaside paradise; cool ocean blues in Token Surfside, and a splash of complementary flame highlights in Shore Flame tell a color story that is as at home inside as it is outside.
Textural, natural-inspired neutrals are featured in the Mist group showing just how beautiful going back to basics can be. Grounding the group is Hybrid, a boucle design in shades of grey. This is contrasted with Cast, which features heathered yarns.
Fabrics from the Emerald group are modern, yet classic, and tantalizingly fresh. With coordinating patterns Reflex, Shore and Cabana in spring shades of emerald and citron balanced by Cast Tinsel, an earthy brown solid, the design possibilities are endless.
To further enhance design horizons, Meridian expands with new colors. The perfect neutral pairing for bolder patterns and brighter colors, Meridian is a subtly textured solid with a soft hand and will be available in Meadow, Mist, Wisteria, Pewter, Flax, Rose, Cameo and Grain.
Rounding out the new additions, Cast showcases heathered yarns providing a sense of texture in eight muted colors. An understated solid, Cast makes an excellent base for larger upholstered pieces with accents of livelier colors in decorative pillows and throws. Cast will be available in Silver, Ash, Shale, Slate, Mist, Oasis, Tinsel and Petal.
Upholstery fabrics from Sunbrella are continually advancing in design sophistication and comfort, resulting in applications both outside and inside the home for coordinated décor. Sunbrella fabrics have been certified by GreenGuard, an international standard, for contributing to indoor air quality.