Housing Construction Shoots Up in April
As per data provided by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, nationwide housing construction increased 13.2% in April to a seasonally adjusted annual rate of 1.07 million units. Housing construction increased in all the regions with the highest increase recorded in the Northeast and Midwest.
Released in May 2014, the data also showed that the double-digit increase in total housing construction in April was mostly driven by increased multifamily starts, which was the highest since Jan 2006. Multifamily starts rose 39.6% to 423,000 units, as more and more young people from the rental market turned into first time homebuyers.
Single-family housing starts increased 0.8% to 649,000 units. The flattish single-family housing starts in April were due to tight credit conditions and uncertain economic conditions. In fact, tight credit conditions, a volatile job market, the shortage of lots and skilled labor, and rising cost of materials have been acting as headwinds for the housing industry in 2014.
Regionally, combined housing production data was impressive in April. Housing production increased 42.1% in Midwest and 28.7% in the Northeast. On the other hand, housing production rose 1.5% in South and 11.1% in the West.
The data shows that issuance of new building permits which is an indicator of future home building activity, rose 8.0% in April. The increase in building permits was driven by a 21.8% increase in multifamily permits and 0.3% increase in single family starts.
Investors interested in the homebuilding sector can consider stocks like Toll Brothers Inc. (TOL), Simpson Manufacturing Co., Inc. (SSD), Gafisa S.A. (GFA) and TRI Pointe Homes, Inc. (TPH). While Simpson Manufacturing and Toll Brothers sports a Zacks Rank #1 (Strong Buy), Gafisa and TRI Pointe Homes hold a Zacks Rank #2 (Buy).
Read the Full Research Report on TOL
Read the Full Research Report on TPH
Read the Full Research Report on SSD
Read the Full Research Report on GFA
Zacks Investment Research
