Economic data from April showed a quick decline in overall business activity across the nation. Approximately 20.5 million jobs were lost during the month, manufacturing production and retail sales slowed significantly, suggesting that April was most likely the worst month thus far in the current economic downturn. Permit data for new home construction showed significant declines as well.
Housing starts fell 30.2% to a seasonally adjusted annual rate of 891,000 in April. This is the lowest level in approximately 5 years, and the percentage decline was the largest since the government began tracking this data point in 1959. This is on the heels of a 18.6% decline in March. Many economists expected a significant decline in the annual rate in April (average of 927,000 from economists polled by Reuters), yet the actual numbers fell a bit further than expected.
Chris Rupkey, chief economist at MUFG in New York, said, “This is an unprecedented recession in that it happened over just two months and this is making it harder for companies and consumers to get their bearings and figure out what to do next.”
Seasonally unadjusted rates for single family housing starts nationwide declined 26% year-over-year from approximately 81,600 to 60,400 units. Housing starts were also on the decline in the South region but to a lesser degree, falling 19.5% from 59,600 in April 2019 to 48,000 in April 2020. Year-over-year declines were most severe in the Northeast (-67.2%) and West (-43.2%).
In Alabama, single family housing starts decreased 5.7% (seasonally unadjusted) from 1,377 units in April 2019 to 1,298 in April 2020. Housing start data for Alabama’s metro areas, along with new construction sales data, will be available later in the week with ACRE’s April 2020 new construction report.
