US housing starts up in April but future is dim

(Story recast to lead with housing starts data)

MUMBAI (ICIS news)--US new home construction activity increased by 2.5% in April compared with March, the Commerce Department reported on Wednesday, but building permits fell sharply by nearly 9%, indicating further near term trouble for the sector.

The department said housing starts last month were at a seasonally adjusted annual rate of 1.528m units, improving on the 1.491m units begun in March.

However, April’s housing starts were fully 16% below the rate of new home construction in the same month a year ago when work was begun on 1.821m units (on a seasonally adjusted, annual basis).

The housing market is a key downstream consumer sector for the chemicals industry, driving demand for a wide variety of chemicals and chemicals-based products such as plastic pipe, insulation, paints and coatings, adhesives and synthetic fibres, among many others.

The department’s data indicate that new home construction has seen a steady if modest increase since the first of this year with housing starts at 1.4m units in January, 1.48m in February and 1.49m in March.

But building permits, which are filed with local governments by contractors when they are ready to begin work, indicate that the sector is far from recovery.

In April, building permits were down by 8.9% to a seasonally adjusted annual rate of 1.429m compared with nearly 1.57m permits filed in March. The April building permits number also is 28% below the revised April 2006 figure of 1.987m.

	Apr ’07	Mar ’07	Mar-Apr ’07	Apr ’06	Apr ’06 to Apr ’07
US housing starts	1.528m*	1.491m*	+2.5%	1.821m*	-16.1%

* Seasonally adjusted & annualised