Construction starts on new U.S. homes rose by a surprisingly strong 8.2% in April and applications for new building permits turned up for the first time in five months, the Commerce Department said Friday in a report showing the hard-hit housing sector still had some spring vigor.
Starts in April ran at a 1.032-million-unit annual rate, up from a revised 954,000-unit rate in March, and permits gained 4.9% to 978,000 a year from a revised 932,000 in March.
Starts on multiple-unit buildings increased but single-family home starts fell.
Nonetheless, it was a significantly stronger overall performance than anticipated by economists surveyed by Reuters who had forecast April starts at a 940,000-unit rate and permits at a 920,000 rate.
The jump in overall April starts was the biggest monthly increase since a 14% rise in January 2006, and the gain in permits was the largest since a 6.7% gain in December 2006.
"It's a nice upside surprise," said Joe Manimbo, a currency trader with Ruesch International in Washington. "Certainly it is the type of data that will back the view that U.S. interest rates have bottomed, supporting the dollar."
New-home building has been in decline for months, partly because many builders are saddled with big inventories of unsold homes. But a wave of foreclosures has caused many lenders to stiffen terms for making mortgage loans.
The April building bounce occurred entirely in multiple-unit dwellings, while single-family home building declined to a rate of 692,000 from 704,000 -- the lowest monthly rate since the 604,000 rate in January 1991.
"Single-family starts continue to show weakness and [are] coming off a 17-year low," said George Adell, a fixed-income strategist with Commerce Capital Markets in Jupiter, Fla. "We can't say we've hit a bottom, but it's better than what we've seen."