Economy Watch: Housing Starts Take a Dip
- May 17, 2013
Housing starts, which have been gaining upward momentum in recent months, took an unexpected dip in April, according to the Census Bureau on Thursday. The annualized rate of housing starts for the month was 853,000 units, a 16.5 percent drop from March, which saw a revised rate of 1.021 million new units.
The decline wasn’t because of a crash in single-family homebuilding, but instead a sharp drop in multifamily construction, which tends to roller coaster. Single-family construction did drop, however, to an annualized rate of 610,000, which is 2.1 percent down month-over-month. But compared with April 2012, the single-family rate is still up by a healthy margin: 13.1 percent. Multifamily starts in April 2013 came in at an annualized 234,000 units, down 37.8 percent for the month, and down 2.5 percent compared with last year.
Housing permits, on the other hand, were up for the month, to an annualized 1.017 million. This is 14.3 percent above the March, and is 35.8 percent above April 2012. Both single-family and multifamily permitting were up for the month, which is something of a leading indicator.
CPI takes a dive
The Bureau of Labor Statistics said on Thursday that the Consumer Price Index dropped 0.4 percent in April, an unusually large decline for a month. But prices are still up year-over-year, with the CPI up 1.1 percent for the year, though that’s the smallest year-over-year increase since 2010. Inflation—predicted by some economists as a side effect of the Fed’s stimulus efforts—is still somnolent.
As in March, a sharp decrease in gasoline prices was the main cause of the decline in the all-items index. The fuel oil index also declined while the electricity and natural gas indexes increased; the net result was a 4.3 percent decrease in the energy index. The food index, unchanged in March, rose 0.2 percent in April.
Take energy and food out of the equation, and the “core” CPI increased 0.1 percent in April, the same increase as in March. Prices for shelter, used cars and trucks, new vehicles and tobacco all increased in April. These increases were partially offset by declines in apparel, airline fares, and recreation.
Unemployment claims rise
The U.S. Department of Labor reported on Thursday that for the week ending May 11, initial unemployment claims were 360,000, an increase of 32,000 from the previous week, which was a post-recession low. The less excitable four-week moving average was 339,250, an increase of 1,250 from the previous week.
Wall Street came down on Thursday from record highs, with the Dow Jones Industrial Average off 42.47 points, or 0.28 percent. The S&P 500 lost 0.5 percent and the Nasdaq dropped 0.18 percent.