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April housing starts disappointing, reflective of labor challenges in residential construction

16 May, 2018

Scott Volling
Partner, PwC US

Housing starts for April came in at 1,287,000, 2.8% below the consensus number of 1,324,000. This is also 3.7% below last month’s result of 1,336,000, which was revised upward by 17,000 units. Permits came in at 1,352,000, very near the consensus number of 1,354,000. Positively, permits in March were revised upward by 23,000 to 1,377,000, a 10+ year high. Also positive in the March revisions is an increase in the single family number of 26,000 units, to 893,000. As we typically see with the volatile multi-family number, March’s strong results were revised downward by 11,000 units to 428,000, while April saw a further reduction of 12.6% to 374,000.

After a strong March that was largely driven by an increase in multi-family starts, the consensus number this month reflects expectations that single family starts would rebound and highlight the pent up demand that continues to exist in the market. However, with single family starts coming in below 900,000 and aggregate starts below 1,300,000, and despite double digit percentage improvements over last year’s results, this month’s numbers are a bit disappointing. While the unexpected spring snow in the midwest and northeast may have temporarily impacted results in those regions, the almost 4% drop in starts over last month may be more reflective of the labor challenges that continue to constrain residential construction.