Home-Building Slides in March, but Permits Show Promise
Home-building slid in March, 6.8 percent below estimates to a rate of 1,215,000, according to the latest data from the U.S. Census Bureau and the Department of Housing and Urban Development (HUD). Single-family housing starts decreased 6.2 percent from February to 821,000. Starts for units in buildings with five units or more came in at 385,000.
“[These] numbers are aligned with our builder confidence metric, which contracted slightly this month but is on solid footing overall,” says Granger MacDonald, chairman of the National Association of Home Builders (NAHB).
“The three-month moving average for single-family starts has reached a post-recession high, which shows that this sector is continuing to firm,” says Robert Dietz, chief economist at the NAHB. “We can expect further gains in single-family production throughout the year, while multifamily starts should level off.”
Permits showed promise, up 3.6 percent from February to 1,260,000, according to the data. Single-family permits decreased 1.1 percent from February to 823,000. Permits for units in buildings with five units or more came in at 401,000.
“Housing construction permits climbed by 3.6 percent from February to March, a significant change and confirmation of an upward trend—17 percent since March of 2016,” says Joseph Kirchner, senior economist at realtor.com®. “That is good news for buyers hoping to find a variety of homes to choose from in their price range. This trend will eventually affect starts and new-home completions, though we will continue to see a shortage of homes on the market.”
Completions totaled 1,205,000 in March, rising 3.2 percent, per the data. Single-family completions increased 7.9 percent from February to 819,000. Completions for units in buildings with five units or more came in at 374,000.
“New-home completions ticked upward…as the unusually warm winter helped builders advance their completion schedules,” Kirchner says. “Since this one-time event reduced the number of construction projects in the pipeline, we hope this will translate into more starts in the coming months.”
The dial down, ultimately, will do little in the way of slowing momentum this spring.
“Confidence in the housing market and economy is improving, signaling a spring home-buying season that could easily be one of the strongest in years,” says Bill Banfield, executive vice president at Quicken Loans. “In many metro areas, it will remain a seller’s market, as first-time buyers look to capitalize on low rates and inventory struggles to catch up with demand.”