A worker saws a section of lumber inside a home under construction. Photographer: Ty Wright/Bloomberg
U.S. new-home construction rose for a second month and topped estimates in April in a sign of positive momentum for the housing sector at the start of the second quarter.
Residential starts increased 5.7% to a 1.24 million annualized rate after a 1.7% gain in March that was previously reported as a drop, according to government figures released Thursday. Permits, a proxy for future construction, advanced 0.6% to a 1.30 million rate.
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Starts and permits were both the strongest in three months, suggesting a brighter outlook for the sector amid lower mortgage rates and the Federal Reserve's patience on borrowing costs. A report Wednesday showed homebuilder sentiment rose to a seven-month high in May, though the industry still confronts a shortage of qualified workers and buildable lots.
Reports due next week are forecast to show existing home sales, which make up about 90% of the market, picked up in April while new home sales were seen easing from a one-year high. A separate report Thursday from the Labor Department showed initial jobless claims fell more than forecast last week to a four-week low of 212,000, offering the latest evidence the jobs market remains tight. The four-week average edged up.
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