Housing Starts Fell in March to a Four-Month Low
New-home construction in the United States cooled in March to a four-month low as starts of single-family properties settled back from the strongest pace in almost a decade, Commerce Department data showed April 18.
Key Points
• Residential starts decreased 6.8% to a 1.22 million annualized rate from a 1.30 in February.
• Forecast was for 1.25 million rate; February’s figure was revised from 1.29 million.
• Permits, a proxy for future construction, climbed 3.6% to a 1.26 million annualized rate in March.
Big Picture
The construction data are volatile from month to month, made worse in this report by changing weather as the unusually warm February that boosted totals during that month gave way to a more seasonal March. Fundamentally, there’s evidence of a strong outlook for the housing industry as homebuilder sentiment holds near the strongest level in more than a decade, and mortgage rates have eased from their post-election high. Builders are still contending with labor and lot shortages as they struggle to keep up with solid demand stemming from a strengthening labor market.
Economist Takeaway
“Builders are more upbeat than they have been since the height of the housing boom, with buyer traffic and sales both running at the best pace in years,” Sam Bullard, an economist at Wells Fargo Securities, said in a note before the report. “The backdrop for the near-term housing outlook is also encouraging as solid job growth and elevated levels of consumer confidence have put would-be homebuyers in a positive frame of mind.”
Other Details
• Report shows a wide margin for error, with a 90% chance that last month’s figure fell between a 19.3% decline and a 5.7% gain.
• Construction of single-family houses declined 6.2% to an 821,000 rate from 875,000 in February that was the strongest since October 2007.
• Groundbreaking on multifamily homes, such as townhouses and apartment buildings, decreased 7.9% to an annual rate of 394,000 in March, a four-month low.
• Starts dropped in three of four regions, led by a 16.2% slump in the Midwest to a six-month low and a 16% decline in the West.
• Completions of single-family dwellings increased to an 819,000 annual rate, the most since September 2008.
