"This continued, slow pace of construction of new homes is a major bottleneck to a faster economic and housing recovery", said National Association of Realtors Chief Economist Lawrence Yun.
After reporting a steep drop in new residential construction in the previous month, the Commerce Department released a report on Tuesday showing that housing starts in the USA unexpectedly saw further downside in the month of April.
Housing starts ticked down 2.6% to a 1.17 million annual pace, the Commerce Department said Tuesday (https://www.census.gov/economic-indicators/#housing_starts?cid=15EI09), and stood just 0.7% higher than in the same month past year. Gross domestic product increased at a pedestrian 0.7 per cent annualized rate in the first three months of 2017.
Building permits also fell below analyst expectations at an annual rate of 1.229 million, down 2.5 per cent from the prior month - still a solid 5.7 per cent above April of previous year.
A survey on Monday showed homebuilders' confidence rose in May, with bullishness about current sales and over the next six months.
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Starts of single-family homes were at a rate of about 835,000, an increase of 0.4% compared with an estimated 832,000 in March. This is 8.6 percent below the revised March estimate of 1,210,000, but is 15.1 percent above the April 2016 rate of 961,000.
Single-family starts surged 19.4 percent in the Midwest and advanced 9.1 percent in the West. They fell 3.4 per cent in the South and tumbled 29.2 per cent in the Northeast to their lowest level since June 2015.
Some of the drop in starts could be weather-related - parts of the United States experienced snowstorms in March and heavy rains in April. Construction of multi-family units dropped a sharp 9.2 percent to a rate of 337,000 units. "Looking ahead, there is room for growth", said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto.
And despite the increase in single-family starts, single-family authorizations slipped, falling 4.5% from 826,000 in March to 789,000 in April.
Single-family housing completions dropped 4.5% to 784,000, down from March's 821,000. Permits for multifamily dwellings were at a rate of about 403,000, an increase of 1.5% compared with 397,000 in March.
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