US builders increase home construction in April

WASHINGTON – Builders ramped up construction of new homes in April, suggesting that the market remains solid despite sluggish economic growth at the beginning of the year.

Housing starts climbed 6.6 percent to a seasonally adjusted annual rate of 1.17 million units, the Commerce Department said Tuesday. The increase makes up for much of March’s 9.4 percent drop in starts, a decline that partially reflected the volatile swings in residential construction on a monthly basis.

Ground breakings are running ahead of last year’s pace, largely because of a dramatic increase in the construction of single-family houses, especially in the Midwest and South. Relatively few existing homes are listed for sale, creating an incentive for developers to expand supplies through building during a period of low mortgage rates.

But a slow economy and turbulent stock market has overlapped with construction slipping so far this year in the West, where housing is generally more expensive.

“This was a decent report and shows that housing will continue to be one of the stronger pillars of the U.S. economy, as long as rates stay relatively low and job growth continues,” said Jennifer Lee, a senior economist at BMO Capital Markets.

Starts rose 22.2 percent in the Midwest and 14.1 percent in the South last month but dropped 10 percent in the West and 7.6 percent in the Northeast.

Builders expect customers to come back into the market as home values rebound.

The National Association of Home Builders/Wells Fargo builder sentiment index released Monday held at 58 in May for the fourth straight month.