By Sandra Fleishman
Washington Post Staff Writer
Wednesday, May 18, 2005
New housing starts nationwide rebounded in April after unexpectedly plunging 17.6 percent in March, the biggest one-month drop in 14 years.
The strong rebound, reported yesterday in data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, lines up with home builders' assertions that unusually bad weather was probably to blame for the surprise slide, rather than any serious change in the brisk housing climate.
David Seiders, chief economist for the National Association of Home Builders, yesterday reiterated that the March numbers seemed to be "an aberration," coming as they did after starts had climbed to a 21-year high in February and following two other months of stepped-up building activity.
"I think it's obviously very reassuring," Seiders said. "It pretty much squares with other things we are seeing," such as much stronger-than-expected home sales and high builder confidence in the housing market.
The number of homes newly under construction in April surged to a seasonally adjusted 2.038 million annual rate, 11 percent higher than in March and 3.6 percent above the figure from April a year ago, according to the government data.
"Housing is through the roof and going skyward," Mark Zandi, chief economist at the consulting firm Economy.com Inc., said yesterday after the release of the government figures. "There is no sign of any weakening in the housing market. And with the recent decline in long-term interest rates, I suspect it's just going to get more active."
Low mortgage rates have kept the housing market pumping despite warnings that the boom might not last. Last week, interest rates for 30-year fixed mortgages averaged 5.77 percent after falling for five weeks.
Zandi said he still expects rates to rise eventually, "but given the mortgage rates to date, I expect to see strong home sales for the next few months at least. . . . And the builders are going to keep building beyond that because they've got a long pipeline" of unbuilt houses for which they already have building permits.
Permits, an indicator of future construction, jumped to 2.13 million units in April at an annual rate, a 5.3 percent increase from March and 2.9 percent above the April 2004 rate, according to the Census Bureau.
Builders in the Washington area are also optimistic about continued strength in the market, even though the number of permits issued is not increasing the way it is nationally. Permits have been slowed, they say, by land-use constraints and the length of time spent both on reviewing proposals to develop and on approving permits.
James M. Kettler, president of mid-size builder Kettler Brothers Homes LLC and president of the Maryland-National Capital Building Industry Association, said "the reason that permits are down [locally] isn't a reflection of the market, it's a reflection of . . . the lack of approvals."
The "entire permitting process, from trying to get a grading permit to getting a building permit, is almost mind-boggling these days," said Kettler. He estimates it takes three times as long as it did five years ago.
Robert J. Sheehan, a housing economist in Woodbridge, said April statistics for permit activity by local counties are not available yet, but that permit activity fell about 13 percent in March from the previous year and was down about 27 percent in the first quarter of 2005 compared with a year ago.
He attributed the decline mostly to a lack of new permits for multifamily buildings. The drop in multifamily construction, Sheehan said, was a "correction from the heavy rental and condo construction that had been underway."