WASHINGTON (AP) — U.S home construction surged in April to its highest pace in five months. Almost all that increase came from the volatile apartment sector, a sign that Americans are still struggling to buy single-family homes.
The Commerce Department said Friday that builders started work on 1.07 million homes at a seasonally adjusted annual rate in April, up 13.2 percent from March. The gains were driven by a 42.9 percent jump in the construction of apartments and condominiums. The rate of building single-family homes rose just 0.8 percent.
The gains for apartment building point to an economy where more Americans rent instead of purchasing a home. Following the housing bust and Great Recession, Americans have been coping with flat wages and job insecurity, making it difficult to save for a down payment. The home ownership rate was 64.8 percent at the start of the year, down from a peak of 69.2 percent during 2004.
Homebuilding has yet to fully rebound during the nearly five-year recovery. That has deprived the economy of a traditional source of growth because each single-family home built creates three jobs and generates $90,000 in tax revenues, according to the National Association of Homebuilders.
Jim O'Sullivan, chief U.S. economist at High Frequency Economics, said that the April construction numbers are "consistent with more strength in rental demand than home sales."
Most of the April gains in multi-family housing were concentrated in the Northeast and Midwest, regions that are bouncing back from the harsh winter where snow and freezing temperatures halted construction.
Applications for building permits, a gauge of future activity, rose 8 percent to an annual rate of 1.08 million. The gains in permits also came almost exclusively from apartments and condominiums.
Single-family home construction has struggled to fully recover from its winter slowdown.
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