Construction of new housing starts was up more than expected in March. A rebound in multi-family construction sparked most of the increase, but the single-family segment lagged behind.
Experts are suggesting that the overall housing market is slowing, despite the increased rate of homebuilding. The multi-family segment is notorious for its volatility, meaning single-family construction is typically a better indicator of market health.
Additionally, a recent survey showed builder confidence falling for the fourth month straight in April. A lack of buildable lots and increasing costs of materials are still hindering homebuilders from meeting the intense demand for new housing.
- U.S. housing starts rose 1.9% to 1.319 million units in March, exceeding Reuter’s forecast of 1.262 million
- The volatile multi-family segment accounted for most of the growth, surging 14.4% to 452,000 units
- Single-family housing starts lagged behind, falling 3.7% to 867,000 units
Housing starts rose 1.9 percent to a seasonally adjusted annual rate of 1.319 million units, the Commerce Department said on Tuesday. Data for February was revised up to show groundbreaking declining to a 1.295 million-unit pace instead of the previously reported 1.236 million units.
Economists polled by Reuters had forecast housing starts rising to a pace of 1.262 million units last month. Permits for future home building rose 2.5 percent to a rate of 1.354 million units in March.
U.S. financial markets were little moved by the data.
Despite the rebound in homebuilding last month, activity appears to be slowing. Single-family homebuilding, which accounts for the largest share of the housing market, fell 3.7 percent to a rate of 867,000 units in March.
A survey on Monday showed confidence among homebuilders fell in April for a fourth straight month. Builders complained about a lack of buildable lots and increasing construction material costs. According to the survey, tariffs imposed by the Trump administration on Canadian lumber and other imported products were “pushing up prices and hurting housing affordability.”
Single-family home construction fell in the Northeast, South and West, but rose in the Midwest. Permits to build single-family homes dropped 5.5 percent in March to an 840,000 unit-pace, the lowest level since September 2017.
With permits lagging starts, single-family home construction could slow further.
Starts for the volatile multi-family housing segment surged 14.4 percent to a rate of 452,000 units in March. Permits for the construction of multi-family homes dropped jumped 19 percent to a 514,000 unit-pace.
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