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Housing starts crushed expectations in April.
Housing starts rose 20.2% in April to an annualized pace of 1.135 million, the highest level since November 2007.
Building permits rose 10.1% to an annualized pace of 1.143 million.
Economists had expected that starts rose 9.6% to an annualized pace of 1.01 million, while building permits rose 2.1% to an annualized pace of 1.06 million.
"We expect housing starts once again breached the psychologically important 1 million unit mark in April," Wells Fargo wrote in a note to clients ahead of the release.
Last month, the data showed a big miss in March starts. The pace of starts climbed just 2.0% to an annualized rate of 926,000 units – well below the 1.04 million units expected.
On Monday, the National Association of Homebuilders' index that measures sentiment showed a drop below expectations to 54 in May, although the index is still above the 50-point benchmark.
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