North American construction at a high pace in April

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Housing starts in US surpassed 1 million in April at a seasonally adjusted annual rate, according to US Census Bureau data. This is an increase of 13% from March.

The increase was entirely in multi-family housing construction, while single-family starts remained steady from the previous month. The slow growth in single-family home construction is reflected in the relatively low confidence of home builders. The strongest increase in residential construction was in the US Midwest and Northeast.

The number of building permits grew by 8% to 1.08 million in April (seasonally adjusted annual rate). The growth in permits was also in multi-family construction. About 45% of all permits issued were for multi-family homes. The number of building permits issued is an indicator of future building activity.

Growth in Canadian housing starts

Canadian housing starts grew by 25% in April at a seasonally adjusted annual rate. The increase was mainly in multi-family housing, while single-family starts grew by 7.2%. The Canadian Housing and Mortgage Corporation (CHMC) still expects reduced housing starts in 2014 compared to last year.

More construction is only expected in the west (Alberta and British Columbia). Economic conditions in Canada are projected to improve in 2014 and 2015 with higher exports and investment expected. Despite a favorable economy, the housing market should moderate. A high number of multi-family homes are under construction and unsold inventory of new homes is on the rise.

Commercial construction remains weak except public projects

Private spending on non-residential construction in the US was unchanged in April fr om the previous month, but public spending increased slightly (+2.4%). The largest growth was in public spending on commercial construction projects (+15%).

The American Institute of Architects reports weak conditions in the commercial and industrial construction markets. Institutional construction even declined. However, architects expect improving conditions this year, although non-residential construction continues to lag the recovery in the housing market.

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