Housing starts surge 13% in April

Home building surged in April as warmer weather helped builders break ground on new homes at the fastest pace this year.

Housing starts rose to a seasonally adjusted annual rate of 1.07 million, up from 947,000 in March, the Census Bureau said Friday.

Economists had predicted a rate of 980,000, according to the median forecast in Action Economics' survey.

The gains came largely from multi-family construction, where starts rose almost 40% from March. Single-family starts were up 0.8% to a annual rate of 649,000.

Building permits issued for home construction, a gauge of future activity, rose 8% to a seasonally adjusted annual rate of 1.08 million. April was the third month in a row for permits have topped a 1 million annual rate. But permits for single-family homes were only up 0.3% to an annual pace of 602,000 last month.

Housing starts improved from March in every region.

Friday's report comes in the midst of a weak start to the spring home buying season and growing concerns about whether the pace of the housing market's recovery will pick up as expected. That's important for the broader U.S. economy, which some economists say will be found to have shrunk in the first quarter once all the data is in.

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Bad weather was fingered as the main explanation for a slowdown in the housing market and the economy during the winter months. April's housing starts report, along with better employment numbers, could be a sign that the economy will rebound in the second quarter.

"After weighing on economic growth over the past two quarters, residential construction now appears poised to positively contribute in Q2," said economist Andrew Labelle, of TD Economics in a research note Friday.