The lede from this morning's story on April housing starts looks great:

Construction of new homes posted the biggest increase in more than two years in April, a rare spot of good news amid the worst downturn in housing in more than two decades.

Small problem, however: All the gain came from APARTMENT buildings, not single-family homes. Naturally the people getting kicked out of their homes need cheaper places to live. Now builders, responding to higher demand and rising rents, are providing. But this isn't exactly a sign of a hearty economy. One of the marks of the housing bubble was a gap between carrying costs for single-family homes -- the (fully indexed and adjusted) mortgage payment -- and the carrying cost for apartments --the rent. That gap has to shrink or disappear for the bubble to resolve. But the shrinkage doesn't just involve falling home prices and mortgage payments. It also involves rising rents, and this is one sign.

The strength in April came entirely from a huge increase in apartment construction, which can be extremely volatile from month to month. Apartment building, defined as two or more units, jumped by 36 percent to a seasonally adjusted annual rate of 340,000 units.

The larger single-family sector dropped by 1.7 percent to an annual rate of 692,000 units...

The National Association of Home Builders reported Thursday that its monthly survey of builder sentiment edged down in May to a reading of 19, just above the all-time low of 18 set in December. The survey had held steady at the low level of 20 from February through April.

David Seiders, the group's chief economist, said that conditions in the industry have continued to deteriorate.