Housing Starts Rise Over 26 Percent

The U.S. Department of Housing and Urban Development has released the new residential construction statistics for April 2014, revealing that privately-owned housing starts increased by 13.2 percent last month, in comparison to the March revised estimate. CF Funding is happy to share that privately-owned housing starts were also up 26.4 percent in comparison to April 2013’s numbers. Increases in housing starts are an indicator of the housing industry’s recovery.

Building permits also rose in April, as privately-owned units were up 8.0 percent from the revised March rate of 1,000,000, reaching a seasonally adjusted rate of 1,080,000. Single-family building permits were up 0.3 percent from the revised March rate of 600,000, reaching 602,000. April marks the third month of permits reaching over 1 million annually.

Single-family housing starts were up 0.8 percent from March to reach 649,000. CF Funding is pleased to see that housing starts improved in every region in April. Privately-owned housing completions were down slightly (3.9 percent) from the revised March estimate. However, the 847,000 privately-owned completions were still 21.2 percent above April 2013’s rate or 699,000.

According to Doug Carroll of USA Today, “Bad weather was fingered as the main explanation for a slowdown in the housing market and the economy during the winter months. April’s housing starts report, along with better employment numbers, could be a sign that the economy will rebound in the second quarter.” CF Funding has explained previously on their blog the effects of bad weather on the housing market.

In other news from the HUD, the average size of newly constructed single-family homes increased during the first quarter of 2014, from 2,656 square feet to 2,736. The median rose from 2,465 square feet to 2,483. As seen in the following chart from the NAHB, there is a clear upward trend of increasing home sizes post-recession.  A new mix of buyers may also be contributing to the upward trend.

The NAHB says the recent rise is “consistent with the historical pattern coming out of recessions… home sizes fall into the recession as some homebuyers cut back, and then sizes rise as high-end homebuyers, who face fewer credit constraints, return to the housing market in relatively greater proportions.” CF Funding has noticed this trend as the lender finances jumbo home loans, construction loans, and second home purchases. The lender recently shared that second home purchases are increasing as the housing industry improves and a rise in home equity allows many homeowners to complete a cash-out refinance or second mortgage.

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