April housing starts fell 6.8% to a 1.63 million annual rate, but the decline is not seen as a trend suggesting weakness
at the leading edge of the economy, says Jim Haughey, senior economist for Newport Communications.
"Although the housing market has peaked and may dip slightly later this year, the April total reported by the Census Bureau is below the expected trend for the rest of the year," Haughey said. "Building permits -- at 1.708 million -- were higher than housing starts and rose slightly from March. The number of permitted homes not yet started hit a record level and was concentrated in the South, where unseasonable weather restrained April starts.
"Also, mortgage rates have dropped 0.3% from the April average. These rates are probably only here briefly, but they will spur near-term starts. And they will also prompt another surge in 'cash out' mortgage refinancing that will support a spring/summer rise in consumer spending."
The multi-family market has a record high vacancy rate, especially in the South and West, so expect the mix to get a little richer in single-family houses, Haughey said. These are bigger and require a higher share of materials delivered by flatbeds and vans instead of cement mixers.