The rate of multi-unit home starts swelled by more than 40 percent in April, pushing all residential starts to a 1.07 million-unit pace, a five-month high. Single-family starts increased by less than one percent, and the multifamily sector also led an eight percent increase in the rate of construction
permits pulled.

Multifamily projects pushed the pace of new home construction in April to its highest level since November, according to a May 16 report from the Census Bureau.

A 43 percent leap in multifamily construction, which includes condominium and apartment starts, drove total housing starts to a 1.07 million annualized rate, a 13.2 percent increase following March's revised 947,000 pace. Single-family starts were held to a 0.8 percent gain in April, reaching an annual rate of 649,000 units, as high prices continue to affect affordability.

"For anyone tempted by these shiny headline numbers to conclude all the recent worry about the state of the housing market was much ado about nothing, we suggest you curb your enthusiasm, at least for now," Richard Moody, chief economist at Regions Financial Corp., said in a research note.

The multifamily sector is prone to volatility, and the 43 percent increase that led to the 413,000-unit rate in
April was reported with a 36 percent margin of error. The margin of error for single-family starts was
less than 11 percent.

Applications for building permits, a gauge of future construction activity, increased 8 percent to an annual rate of 1.08 million units. The gains in permits also came almost exclusively from multifamily construction. In spite of these increases, recent home construction rates are far below the 1.7 million annual starts economists estimate are needed to meet market demand and keep up with population growth.