video transcript

The sound of hammers building new homes is music to the ears of economists. But last month it was a bit quieter. Housing starts fell much more than expected- down 8.5 percent- in large part because of a steep 24% drop in multi-family housing. But housing data is volatile. Yelena Shulyateva of BNP Paribas: SOUNDBITE: YELENA SHULYATEYVA, U.S. ECONOMIST, BNP PARIBAS (ENGLISH) SAYING: "This is just one month of data and multi-family starts where we saw the decline is a particularly volatile series. Single-family starts increased for two months in a row and building permits which is an indicator of future activity as well saw an increase." In fact, permits increased at their highest pace since June of 2008. PNC Bank's Gus Faucher says the housing recovery will continue to build momentum: SOUNDBITE: GUS FAUCHER, VICE PRESIDENT AND SENIOR MACROECONOMIST, PNC FINANCIAL SERVICES GROUP (ENGLISH) SAYING: "The conditions for underlying growth in the housing market are very good. Affordability remains very high. Prices are down by about 1/3 from their peak prior to the recession. Mortgage rates remain very low. Credit is becoming more available. Job gains are supporting consumer confidence and making people a little bit more willing to buy homes." But that demand may not be so easily met according to David Crowe, chief economist at the National Association of Home Builders. SOUNDBITE: DAVID CROWE, CHIEF ECONOMIST, NATIONAL ASSOCIATION OF HOME BUILDERS (ENGLISH) SAYING: "I think that the builders continue to have trouble getting ahead of demand because they are having difficulty borrowing money to do that- to place their homes for sale. And so if that continues and we know we are going to see continued demand- there is a lot of pent up demand from people having waited for 2 or 3 years. Employment is improving enough to bring people back into the market. " One key market to watch: rentals. Thanks to a still-tight credit market and the appeal of flexibility to the newly employed. SOUNDBITE: DAVID CROWE, CHIEF ECONOMIST, NATIONAL ASSOCIATION OF HOME BUILDERS (ENGLISH) SAYING: "What we have is a lot of young households who also postponed forming their own independent household. Now that they are getting jobs, now that they feel a little more comfortable about their economic future they are going out and becoming renters and that has been the reason we have had a very strong increase in rental construction." If fact, Toll Brothers, the largest U.S. luxury homebuilder says its building fewer homes- and is now going to enter the rental market.