The drop in overall production can be attributable to a decline in the multifamily sector-which includes apartment buildings and condos-after a big uptick in March.
Figures released this morning showed US home building tumbled in April and permits fell, suggesting the housing market continued to tread water amid shortages of land and skilled labour. Permits, a proxy for future construction of all types of homes, fell 1.8% to a 1.35 million rate (matching the estimate).
Residential starts fell 3.7% to a 1.29 million annualized rate (the estimate was 1.31 million) after a revised 1.34 million pace in the prior month.
While a survey on Tuesday showed confidence among single-family homebuilders perked up in May, builders complained that "the record-high cost of lumber is hurting builders' bottom lines and making it more hard to produce competitively priced houses for newcomers to the market".
"With these fundamentals in place, the housing market should improve at a steady, gradual pace in the months ahead".
"We expected some pullback this month after such a strong March report, but housing starts remain at very healthy levels in April", said NAHB Chairman Randy Noel.
The report showed 163,000 homes were authorized for construction in April but not yet started, up 14% from 143,000 a year ago and indicating a steady pace of homebuilding in coming months.
Last month's gain in single-family starts was outpaced by an 11.3 percent decline in groundbreaking activity on multi-family housing units. Home builders are struggling with higher prices for lumber and other building materials and a shortage of skilled laborers. These constraints have left builders unable to plug an acute shortage of houses on the market, restraining home sales growth.
Multifamily starts for buildings with five or more units increased by 7.2% year over year in April and fell by 12.6% compared with March.
"On an April year-to-date basis, the supply-starved West region was by far the most vibrant, growing construction region, with a 28 percent increase in construction", Khater said.
Housing economists have more closely watched trends in single-family building, which has seen below-average building for several years.