U.S. housing starts, permits surge in April

[May 19, 2015]  WASHINGTON (Reuters) - U.S. housing starts jumped to their highest level in nearly 7-1/2 years in April and permits soared, offering a glimmer of hope for an economy that is struggling to regain strong momentum after a dismal first quarter.

Groundbreaking surged 20.2 percent to a seasonally adjusted annual pace of 1.14 million units, the highest since November 2007, the Commerce Department said on Tuesday. The percent increase was the biggest since February 1991.

March's starts were revised up to a 944,000 unit rate instead of the previously reported 926,000 unit pace.

Starts for single-family homes, which accounts for the largest share of the market, soared to their highest level since January 2008. Groundbreaking for the volatile multifamily segment also recorded hefty gains last month.

Permits for future home construction jumped 10.1 percent to a 1.14 million-unit rate, the highest since June 2008. Permits have been above a 1 million-unit pace since July.

Economists polled by Reuters had forecast groundbreaking increasing to a 1.02 million-unit pace and permits rising to a 1.06 million-unit rate last month.

While the robust data probably overstates the health of the housing market, the signs of strength fit in with views that a housing rebound is under way. Housing's strength is in stark contrast with weakness in consumption, business spending and manufacturing.

There is cautious optimism that housing, which has seen an acceleration in home sales and prices, will combine with a tightening labor market to lift the economy out of the soft patch hit at the start of the year.

The government reported last month that gross domestic product grew at a 0.2 percent annual pace in the first quarter. But weak March trade and inventories data suggested the economy actually contracted.

The government will published its revised GDP data next week. Output at the start of the year was held down by a harsh winter, a strong dollar, a ports labor dispute and deep energy spending cuts in the first quarter.

Groundbreaking rose in three of the four regions, but fell 1.8 percent in the South, where most of the home building takes place. Last month, single-family homes groundbreaking gained 16.7 percent. Groundbreaking for the multi-family homes segment increased 27.2 percent.

Single-family permits increased 3.7 percent last month. Multi-family permits surged 20.5 percent.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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