Homebuilding slides 3.7% in April

Apartment-construction projects drop 12.6%, agency says

WASHINGTON — U.S. builders broke ground on fewer apartment buildings last month, pushing overall home construction down 3.7 percent from March.

The Commerce Department said Wednesday that housing starts fell to a seasonally adjusted annual rate of 1.29 million in April, the lowest since December. Apartment construction tumbled 12.6 percent to 374,000. Construction of single- family houses rose 0.1 percent to 894,000.

Still, housing starts are up 10.5 percent from April 2017 on a 7.2 percent increase in single-family homes and a 19.1 percent surge in apartments.

Home construction has grown steadily since the housing crash hit bottom in 2012. The pace of homebuilding is still below its long-run average of about 1.5 million a year, which has led to a shortage of houses on the market. Homebuilders are struggling with higher prices for lumber and other building materials and a shortage of skilled laborers.

A healthy job market is giving Americans the confidence to shop for houses. Millennials are increasingly moving out on their own to buy their own houses.

Demand for housing is strong despite an increase in mortgage rates: The rate on the benchmark 30-year, fixedrate home loan is 4.55 percent, up from 4.05 percent a year ago.

“We expect housing starts to continue to gain ground through 2018, supported by positive fundamentals

such as low unemployment and healthy wage increases, which are expected to offset higher mortgage rates,” Leslie Preston, senior economist at TD Economics, wrote in a research note. “At the same time, tight inventories and rising prices will continue to support homebuilding.”

In April, housing starts fell 16.3 percent in the Midwest, 12 percent in the West and 8.1 percent in the Northeast. They rose 6.4 percent in the South.

Building permits, an indicator of future construction, fell 1.8 percent in April to a seasonally adjusted 1.35 million. The report showed 163,000 houses were authorized for construction in April but not yet started, up 14 percent from 143,000 a year ago and indicating a steady pace of homebuilding in coming months.

While demand and homebuilding remain solid, the industry is not without its challenges. Construction companies cite a shortage of workers, rising costs for lumber and other building materials and a scarcity of available lots on which to start new projects. Affordability is also becoming a bigger issue as gains in property values outpace income growth and as interest rates rise.

AP file photo Home construction, like this one in Pennsylvania, has grown steadily since 2012, but the pace is below the long-run average.