Housing starts for privately-owned homes rose by nearly 30 percent year-over-year in April, perhaps the strongest sign yet of a recovery in residential construction.
According to the latest data from the U.S. Census Bureau and the Department of Housing and Urban Development, starts were up 2.6 percent from March to April and 29.9 percent from April 2011 to a seasonally adjusted annual rate of 717,000.
Single-family housing starts were also positive, rising 2.3 percent from March to a rate of 492,000.
John Carroll, the Chicago division president of Ryland Homes, said the big increase in starts was no surprise to Ryland, given the rise in demand the company had already seen for its developments.
“We were not surprised by the increase in starts in the month of April,” Carroll said. “Ryland’s sales nationwide were up significantly in the first quarter, including our Chicago Division’s March sales, which were the highest they’ve been for a single month since 2008.”
A big part of that local demand, Carroll continued, is Chicago’s unique relationship with rentals and homes.
“Chicago is actually one of the few markets today where it is actually cheaper to own a home than to rent,” he said. “With our new homes being offered at values similar to resale housing stock, without all the warts, it’s not surprising that we are seeing increased interest in our sales offices.”
The rental/ownership divide has also played a role in the business of PulteGroup, said Maria Wilhelm, the VP of sales for the company’s Illinois Division.
“Rising expensive rental rates and falling vacancies are beginning to tip the scale toward homeownership for renters across the country,” Wilhelm said.
Another factor, Wilhelm said, has been the newest development from Pulte, which aim to offer the right home in the right area for the right price, as she framed it. And now, with economic conditions improving for many consumers, demand has picked up considerably.
“Pulte Homes had a fantastic grand opening in Glenview, and are currently over 30 percent sold out of the Regency at The Glen – Villas,” she said.
The Census Bureau also reported on housing completions and building permits in its data.
For privately-owned housing completions, April’s seasonally adjusted annual rate of 651,000 was a 10.0 percent increase from March and a 20.1 percent increase from April 2011; in the single-family market, the 489,000 rate of completions was an even more impressive 11.4 percent rise from March.
Building permits were the one area that did not show uniform increases, but yearly, they still posted significant increases. From March to April, the rate of 715,000 was a 7.0 percent drop, but compared to April 2011, the rate is 23.7 percent higher. For single-family authorizations, the rate of 475,000 was a 1.9 percent increase from March.
In a blog entry on the data, Calculated Risk’s Bill McBride framed the increases in a historical light.
“[T]otal housing starts have been increasing lately after moving sideways for about two years and a half years,” he wrote. “Total starts are up 50 percent from the bottom, and single family starts are up 39 percent from the low. This was above expectations of 690,000 starts in April, and was especially strong given the upward revisions to prior months. The housing recovery continues. “