U.S. home building surged in April | Katonah Real Estate

U.S. home building surged in April to the highest level since before the recession officially began, a sign of thaw in the housing market during the crucial spring selling season.

U.S. housing starts rose 20.2% from a month earlier to a seasonally adjusted annual rate of 1.135 million in April, the Commerce Department said Tuesday. That was the highest reading since November 2007, and the biggest percentage increase since February 1991. New applications for building permits, a bellwether for construction in coming months, increased 10.1%.

Home-construction figures are volatile and often revised, and housing data have been mixed over the past several months. But economists have been cautiously optimistic despite the uneven readings and many said Tuesday's report offered reassurance the housing market is rebounding after a dismal first quarter.

"It is hard to know where the underlying trends in the starts and permits data are because of the recent big changes in the data," J.P. Morgan Chase economist Daniel Silver said in a note to clients. "But today's report is a step in a favorable direction following some downbeat reports on residential construction."

The increased activity was broad-based. Starts on single-family units, which exclude apartments and represent almost two-thirds of the market, climbed 16.7%, the most since January 2008. Multifamily units, including apartments and condominiums, rose 27.2%.

Economists surveyed by The Wall Street Journal had expected April housing starts to reach a rate of 1.01 million.

Tuesday's report showed new-home construction rose 4.9% in March from the prior month, compared with an initially reported 2% increase.

Economists now expect economic output shrunk by as much as 1% in the first quarter, and hopes for a spring rebound had been fading amid a string of sluggish economic data in recent weeks.

Following Tuesday's housing-starts report, however, some forecasters increased their estimates for second-quarter economic output. Barclays boosted its estimate for gross domestic product to a 2.7% growth rate, from 2.6%. Economists at Goldman Sachs also raised their estimate to 2.7%, from 2.5%. Macroeconomic Advisers raised its estimate to 2%, from 1.9%.

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