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Housing Permits Drop as Starts Increase in April

Housing permits dipped in April for the first time in four months, the ""Census Bureau"":http://www.census.gov/ and ""HUD"":http://portal.hud.gov/hudportal/HUD reported jointly Wednesday but housing starts improved.

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Both indicators remained far above year-earlier levels.

The month-over-month increase in starts in April appeared still larger because of a downward revision to March's report.

Economists surveyed by Bloomberg expected permits to drop month-over-month and starts to increase.

According to the report, there were 715,000 permits issued at a seasonally adjusted annual rate in April ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô compared to an expected 725,000 ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô and 717,000 starts compared with an expected 690,000.

The month-over-month percentage drop in permits ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô 7.0 percent ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô was the largest since January 2011 when permits fell 10.0 percent.

Builders completed 651,000 homes in April, a 10 percent jump from the 592,000 completed in March and the highest level since

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June 2010.

The increase in starts was evenly split between single- and multifamily activity while multifamily homes pulled permit activity down.

Total starts in April were up nearly 30 percent from April 2011 and permits were up 23.7 percent from year earlier activity. Total completions were up 20.1 percent from last year.

The census data covered the same month for which the ""National Association of Home Builders"":http://www.nahb.com/ (NAHB) reported builder confidence ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô measured by the Housing Market Index ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô had fallen from 28 (out of 100) to 24.

Any HMI reading below 50 is considered to signal a contraction. Builder confidence as reported Tuesday by NAHB rose to 29, its highest level in almost five years.

Total housing completions increased for the third straight month and fourth time in the last five months.

According to the report, builders completed 489,000 single-family homes ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô highest level since June 2010 ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô again far surpassing the rate of new home sales.

According to the Census Bureau, new single-family home sales fell to an annualized rate of 328,000 in March from 353,000 in February. With home being completed at a faster pace than sales, inventories are likely to increase placing downward pressure on price.

Starts rose sharply in the South to 385,000 in April from 345,000 in March and modestly in the Midwest ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô 127,000 from 119,000 ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô but fell in both the Northeast ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô 69,000 from 87,000 ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô and West ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô 136,000 from 148,000.

Permits in April fell in every region except the Northeast where filings were flat to March.

About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.
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