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Thomson Financial News
US April housing starts up 8.2 pct to 1.032 mln unit annual rate UPDATE
05.16.08, 11:46 AM ET

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WASHINGTON (Thomson Financial) - U.S. builders broke ground on more homes than expected this April, but all of the additional building took place on multi-family homes. Starts on single-family homes fell to their lowest level in 17 years, the Commerce Department said today.

Total housing starts in April rose 8.2 pct to a 1.032 mln unit annual rate, up from 954,000 mln units in March.

Economists polled by Thomson's IFR Markets were expecting a cutback to 940,000 units.

Starts of homes for five or more families rose 40.5 pct to an annual rate of 326,000 units. But this number has been so volatile 'that its results are almost random on a monthly basis,' said Joshua Shapiro of MFR. 'More important is the direction of single-family starts,' he said.

New construction of single-family homes, a better and more stable indicator of new home trends, fell 1.7 pct to a 692,00 unit rate, the lowest level since Jan. 1991.

'While this is 'bad' news, it also indicates that the builders are rapidly taking supply off the market, which ultimately will lay the foundation for stabilization in the sector,' said Michael Darda of MKM Partners.

By region, starts fell only in the Northeast, by 12.7 pct. The Midwest saw the largest jump in starts, by 24.4 pct, followed by the West at 18.5 pct and the South at 3.6 pct.

Building permits for new home starts in April were up 4.9 pct to 978,000 units.

Economists were expecting only 915,000 permits to be issued in the month.

Single-family permits rose 4.0 pct to 646,000. In the Northeast, permits for single-family homes maintained last month's record low of 60,000. Permits in the South fell to the lowest level since June 1993.

Roger Kubarych of Unicredit said it will take several months before the housing market can 'genuinely stabilize' as there is an eleven month backlog of inventories at the current sales rate and and builders' sentiment dipped to 19 in the latest National Association of Homebuilders survey.
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