INSTANT VIEW: Housing starts, building permits rise

NEW YORK (Reuters) - Construction starts on new U.S. homes rose by a surprisingly strong 8.2 percent in April and applications for new building permits turned up for the first time in five months, the Commerce Department said on Friday in a report showing that the hard-hit housing sector still had some spring vigor.

KEY POINTS: * Starts in April ran at a 1.032-million-unit annual rate, up from a revised 954,000-unit rate in March, while permits gained 4.9 percent to 978,000 a year from a revised 932,000 in March. * That was a significantly stronger performance than anticipated by economists surveyed by Reuters who had forecast April starts at a 940,000-unit rate and permits at 920,000 a year.

COMMENTS:

ZACH PANDL, ECONOMIST, LEHMAN BROTHERS, NEW YORK:

"The headline number is stronger-than-expected due to strength in the multifamily sector which tends to be volatile so I would discount the headline number a bit."

"Housing permits, which have become more important because they are more forward-looking, are encouraging. They show a bit more strength than what the NAHB (National Association of Home Builders) survey. Overall, it's a mildly better-than-expected report."

"Still the housing market is in a state of massive imbalance, and residential construction activity will not pick up in the next few quarters."

GEORGE ADELL, FIXED INCOME STRATEGIST, COMMERCE CAPITAL

MARKETS INC., JUPITER, FLORIDA:

"The number came in stronger than what the Street had expected so that's why we are seeing some pressure on Treasuries."

"The strength was in the multifamily sector; it's basically a reverse of prior month's decline. The details take some of sting off the upswing."

"Single-family starts continue to show weakness and coming off a 17-year low. We can't say we've hit a bottom, but it's better than what we have seen."

JOE MANIMBO, CURRENCY TRADER, RUESCH INTERNATIONAL,

WASHINGTON:

"It's a nice upside surprise and it is certainly a positive figure following yesterday's disappointing U.S. data. Certainly it is the type of data that will back the view that U.S. interest rates have bottomed, supporting the dollar."

MARKET REACTION: * BONDS: U.S. Treasury debt prices drop. * CURRENCIES: U.S. dollar turns up. * STOCKS: U.S. equity index futures shoot higher, and indexes in Europe extend session gains. * RATE FUTURES: U.S. short-term interest rate futures hold steady, pricing in a 10 percent probability of a 25 basis point rate cut at the Fed's June meeting.