Housing Starts Surprisingly Rose in April

Housing starts rose to an annual rate of 1.032M in April, well above consensus expectations. Gains were concentrated in the highly volatile multi-family segment. Single-family starts continued to decline for the 12th straight month. We think that starts should continue to fall into the summer.

Starts Rose but More Declines to Come

• Starts jumped higher on gains of 90k units in the multi-family segment. While temporarily raising the headline figure, we do not expect the support to continue.
• Single-family starts continued to decline, but permits rose for the first time in over a year. We certainly are much closer to the bottom than we are to the peak at this point.

Completions Continued to Decline

• Starts are running at just over a 1.0 million unit pace through the first four months of the year, the slowest since 1991. We think starts will continue to decline and may reach the lowest annual total since data began in 1947.
• Completions fell below starts for the first time since 2006. The market needs to work off excess inventory to stabilize.

Wachovia Corporation
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