U.S. Housing Starts Declined 2.8% in April, Yet Exceeded Forecasts
By TopHolding Editorial · Thursday, May 21, 2026 at 12:00 AM
U.S. housing starts fell 2.8% in April to an annualized 1.465 million units, although this still surpassed consensus expectations. The decline was entirely attributable to a drop in single-family home construction, while multi-unit starts increased.
U.S. housing starts experienced a 2.8% decline in April, reaching a seasonally adjusted annual rate of 1.465 million units. Despite this decrease, the figure outperformed the consensus forecast of 1.410 million. On a year-over-year basis, overall starts have risen by 4.6%. The drop in April was driven solely by a 9.0% decrease in single-family starts, which are down 2.4% over the past year. In contrast, multi-unit starts saw an increase in April and have surged by 19.7% over the last twelve months.
New building permits climbed by 5.8% in April to an annual rate of 1.442 million, also exceeding the consensus estimate of 1.384 million. However, a similar trend emerged in the permits data, with the strength attributed entirely to a 21.8% jump in the more volatile multi-unit category. Single-family permits declined by 2.6% in April to an eight-month low, representing a 5.5% decrease from a year ago.
Homebuilders have been focusing on completing projects, with completions rising 4.8% in April to an annual rate of 1.449 million. Nonetheless, completions have shown a slowing trend recently, down 2.0% over the past year. Despite this, completions have outpaced starts in eight of the last twelve months, contributing to an 8.5% reduction in the total number of homes under construction compared to a year ago. While historically such declines have been linked to housing busts, the persistent undersupply of new homes since 2007, with the exception of the COVID-19 period, suggests that national average home prices are likely to remain elevated.
The challenging environment for builders is reflected in the National Association of Home Builders (NAHB) index, which measures homebuilding sentiment. The index rose to 37 in May from 34 in April, but a reading below 50 indicates that more builders view conditions as poor rather than good – a trend that has persisted for 25 consecutive months. In related housing news, pending home sales, which track contracts on existing homes, increased by 1.4% in April, following a 1.7% rise in March, hinting at a potential upswing in May's existing home sales figures. On the manufacturing front, the Philadelphia Fed index unexpectedly fell to -0.4 in April from +26.7 in March, indicating a contraction in regional factory sentiment. Lastly, initial jobless claims decreased by 3,000 last week to 209,000, while continuing claims increased by 6,000 to 1.782 million, suggesting ongoing job growth into May.
Key terms:
1. Housing Starts: An economic indicator that measures the number of new residential construction projects on which ground has been broken during a given period.
2. Building Permits: An economic indicator that measures the number of permits issued for new construction, serving as a leading indicator for future housing starts.
3. Annual Rate (Seasonally Adjusted Annual Rate - SAAR): A projection of a monthly or quarterly economic data point to an annual figure, adjusted to remove predictable seasonal variations, allowing for a more accurate comparison of trends over time.