On April 25, Freddie Mac released its U.S. Economic and Housing Market Outlook for April. According to the report, “recent employment and housing data may be more noise than a break in momentum due to the unseasonably warm winter.”

The report illustrated that:

• Despite one noisy month, the outlook for the labor market this year is to remain on track with an increase in job growth over 2011 and a further acceleration in 2013.
• The first quarter of 2012 registered the best quarterly payrolls performance since the spring of 2006, despite falling short of expectations.
• Expect unemployment to decrease further from 8.2 percent in March to 8.0 percent by the fourth quarter.
• March retail sales showed that consumers continued to spend aggressively, bringing first-quarter sales 2 percent above sales in the previous quarter.
• Expect 30-year fixed-rate mortgages to gradually increase in the second half of 2012 to about 4.25 percent to 4.50 percent by the end of the year.

“A soothsayer warned Julius Caesar to ‘Beware the Ides of March,’ and perhaps the same can be said for some economic series during the winter months,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Some series are more prone to statistical ‘noise’ during low-volume months such as housing starts and home sales. At other times series can exhibit unexpected changes from one month to the next when weather is exceptionally mild or severe.”

The report showed that residential housing starts fell by 5.8 percent to 654,000, the lowest since October, with multifamily starts down 17 percent and single-family off only 0.2 percent. Building permits in March, however, were up 4.5 percent to 747,000, led by multifamily which jumped 21 percent; single-family permits fell by 3.5 percent.

“Relatively small sample sizes during winter months and unusually mild or severe weather add ‘noise’ to seasonally adjusted, annual rate estimates for housing starts and permits,” he continued. “Since 1959, one-family starts have moved 9 percent on average between successive winter months but only 4 percent month-to-month during the summer.”