March Housing Starts Bounce, but Not High Enough

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The U.S. Census Bureau and the Department of Housing and Urban Development reported Tuesday morning that new housing starts in March rose to a seasonally adjusted annual rate of 1.319 million, an increase of 1.9% from the upwardly revised February rate of 1.295 million and an increase of 10.9% compared with the March 2017 rate of 1.189 million.

The revision to the February rate added 59,000 new housing starts from the previously reported total. The consensus estimate from a survey of economists expected a rate of around 1.269 million.

Single-family housing starts fell month over month by 33,000 in March to 867,000. The decrease reflects month-over-month dips of 9.4% in the Northeast and 9.8% in the South.

Danielle Hale, chief economist at Realtor.com, commented on the drop in new housing starts:

Total housing starts are important for economic growth, but single-family starts are the key to replenishing our severely depleted housing inventory. In March, while the total number of starts grew to 1.32 million we saw single-family housing starts slip to 867,000, behind where we should be. Last month’s single family starts are less than half of what we saw during the peak in early 2006 and roughly 30 percent below normal.

The seasonally adjusted rate of new building permits rose to 1.354 million, up 2.5% over the upwardly revised February rate of 1.321 million and 7.5% higher than the March 2017 rate.

Permits for new single-family homes fell month over month in March from a revised annual rate of 889,000 in February to a seasonally adjusted annual rate of 840,000. The rate rose 7.5% year over year.

Multi-family starts for buildings with five or more units increased by 23.7% year over year in March and rose by 16.1% compared with February. This number is more volatile than the single-family number and has been moving mostly sideways since 2013.

In 2017, 1.202 million housing units were started, up 2.4% compared with 2016, and a 10-year high. An estimated 1.263 million permits were issued in 2017, up 4.7% year over year.