MAY 16, 2012 1:33pm ET

Surprise: Single-Family Starts Beat Expectations

MAY 16, 2012 1:33pm ET
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Builders broke ground on more single-family homes in April than expected and the government revised upward its estimate of construction activity in March and February.

The Census Bureau reported Wednesday that single-family starts rose to a 492,000 seasonally adjusted annual rate in April from a 481,000 rate in March.

The March and February figures were revised upward by 19,000 and 7,000 units, respectively.

Some Wall Street analysts were looking for a slight rise in April starts to 465,000 SAAR.

Overall, single-family starts are up 12% from a year ago.

On Tuesday, Federal Reserve governor Elizabeth Duke noted that recent indicators of housing construction activity have been “somewhat encouraging.”

However, household formation is “especially weak” and demand for single-family homes “remains stubbornly tepid,” she told the National Association of Realtors.

Mortgage credit also is tight and it is “particularly more difficult for first-time homebuyers” to get approved for a loan, she said.

“For newly originated mortgages, the median credit score of prime borrowers rose from 700 in 2006 to more than 760 in 2009, where it remains today,” Duke told Realtors at their midyear meeting in Washington.

Meanwhile, a large swath of borrowers appear to be “essentially excluded from the mortgage market,” the Fed governor said.

Fed research shows the minimum credit score required to obtain credit was 625 in 2006 and it is approximately 690 today.