WASHINGTON -- Housing starts dropped 16.5% in April to the lowest level since November, but permits for future construction rose to a nearly five-year high, providing mixed signals for the red-hot real estate market.
Construction on privately owned homes, condominiums and apartments started at a seasonally adjusted annual rate of 853,000 units in April, down from the revised rate of 1.02 million the previous month, the Commerce Department said Thursday.
Analysts had expected a more modest falloff to an annual rate of about 970,000 units. Still, the April figure was up 13.1% from a year earlier.
The drop last month was driven by a 37.8% decline in starts of multi-family projects with five or more units.
Single-family home starts were down 2.1% in April from the previous month. The biggest dropoff was in the South, which was down 12.8% from March.
New construction on single-family homes was up in every other region, including a 48.8% rise in the Northeast and a 4.5% increase in the West.
The bad news on housing starts was mitigated by a surge in building permits, an indicator of future activity. The jump, which also was driven by multi-family construction, was more than economists had projected.
Builders took out permits at a seasonally adjusted annual rate of 1.02 million in April, up 14.3% from the previous month. It was the first time the figure topped the million mark since June 2008.
Permits for single-family homes were up 3%, but soared 40.6% for projects with five or more units.
“Permits makes the slide in housing starts look less of a worry,” said Chris Rupkey, chief financial economist for the Bank of Tokyo-Mitsubishi in New York.