US housing starts peak in April, economists say

A key gauge of housing market activity in the US turned down last month, although the details of the report were somewhat stronger, according to economists.

Housing starts in the States shrank by 3.7% month-on-month in April to reach an annualised pace of 1.287m, according to the Department of Commerce.

That was below the 1.325m that economists had penciled-in.

However, single-family starts, which are arguably the most important data series contained in the report, were 0.1% higher on the month at 894,000.

Multi-family starts on the other hand retreated by 11.3% on the month.

As well, housing permits, a key lead indicator for the sector, also declined, retreating by 1.8% on the month to reach an annualised pace of 1.377m, but nevertheless printed ahead of the consensus forecast for a reading of 1.350m.

In comparison to a year ago total starts were still 10.5% higher.

The March estimate for total housing starts was revised slightly higher, from 1.319m to 1.336m.

Housing starts past their peak as interest rates climb

Commenting on Wednesday's figures, Ian Shepherdson at Pantheon Macroeconomics said: "The details are better than the headlines, because all the decline in both starts and permits is in the volatile multi-family sector, where activity was very elevated in March and has now corrected.

"[...] Over the past six months, single-family permits have been about flat, and we expect no significant net change over the summer. Indeed, with mortgage rates rising, we think activity probably has now peaked for this cycle, though the trend in multi-family construction can keep rising, given the very low vacancy rate for rental property."