Let me quickly dispel any notion that the 8.2% surge in housing starts in April reported by the Commerce Department on May 16 was a positive sign for real estate, or that it has much significance at all.
The rise was fueled by a 40.5% leap in construction starts on multifamily homes of five or more units – a monthly statistic that is notoriously volatile (April’s increase followed a 35% decrease in March and a 24% increase in February).
So let’s focus on the important number. Single-family home starts dropped 1.7% to a seasonally adjusted 692,000 annual rate, another sign that builders are holding back on new projects while they unload unsold homes and wait for a rebound.
Still, the April drop in single-family home starts was the smallest decline since June 2007 when starts fell 0.9%. Single-family home starts decreased 7.7% in November and the rate of decline has been falling ever since. The last time single-family starts increased was in April 2007.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.