Everyone’s Overreacting to the Decline in Housing Starts—Permits Are Up and It’s Fine  

AUCKLAND, NEW ZEALAND - MAY 16: Construction on an apartment block is seen on May 16, 2013 in Auckland, New Zealand.

Photo by Phil Walter/Getty Images

New housing starts fell considerably—16.5 percent—between April and March, which is leading to some panic on twitter. I’m going to say that this is the month when my once-a-month invocation to pay more attention to the more-accurately-measured building permits series is finally going to pay off. In April of 2012, US jurisdictions issued permits for the construction of 749,000 new housing units. In March 2013, they issued permits for the construction of 890,000 new housing units. In April 2013, they issued permits for the construction of 1,017,000 new housing units. That is an ongoing recovery in the pace of housing construction, exactly what you would expect given the low levels of construction from which we’re recovering, the low interest rates, and continued population growth.

That’s my story and I’m sticking to it. I don’t know what happened to April housing starts. The issue appears to be concentrated in the multi-family segment, where any given project can account for hundreds of units. It’s possible there was some concentrated episode of bad weather somewhere, or mismanagement, or a labor dispute, or just a measurement error. But people are filing the paperwork to build more houses, and they’re getting approval to build them.