Housing starts in March were at a seasonally adjusted annual rate of 1.319 million, an increase of 1.9% compared with 1.295 million in February and an increase of 10.9% compared with 1.189 million in March 2017, according to estimates from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
Starts of single-family homes were at an annual rate of 867,000, a decrease of 3.7% compared with a revised estimate of 900,000 in February. Starts of multifamily units (five units or more per building) were at a rate of 439,000, an increase of 16.1% compared with February.
Building permits were at a seasonally adjusted annual rate of about 1.354 million, an increase of 2.5% compared with a revised 1.321 million in February and an increase of 7.5% compared with 1.260 million in March 2017.
Permits for single-family homes were at a rate of 840,000, a decrease of 5.5% compared with a revised 889,000 in February. Permits for multifamily homes were at a rate of about 473,000, an increase of 22.9% compared with 385,000 the previous month.
“Builders are optimistic about future demand for housing and are ramping up production to meet this demand,” says Randy Noel, chairman of the National Association of Homebuilders, in a statement. “Single-family starts dropped slightly this month, but single-family permits year-to-date are up five percent from their level over this same period in 2017.”
“The modest decline in single-family starts in March is still in line with our solid builder confidence readings and is largely attributable to lingering winter weather that is causing production delays in certain areas of the country,” adds Robert Dietz, chief economist for NAHB. “With ongoing job creation, wage increases and rising household formations, we can expect continued, gradual strengthening of the housing market in the coming months.”
Regionally, combined single- and multifamily housing production increased 22.4% in the Midwest and ticked up 0.8% in the Northeast. However, starts were down 0.6% in the South and 1.5% in the West.
In a separate statement, Mark Fleming, chief economist for First American Financial Corp., says the increase in housing starts and also the 1.9% year-over-year increase in housing completions “signal that some modest relief for the housing supply shortage is on the way.”
“The continued year-over-year growth in completions means more homes on the market in the short-term and the dramatic rise in construction employment this month indicates housing construction is likely to increase in the months ahead,” Fleming says.
“It’s no secret that the limited supply of homes for sale is the biggest issue facing the housing market today,” Fleming says. “From a short-term perspective, this month’s overall pace of housing starts, 1.32 million units, may modestly alleviate the supply shortage.”
Fleming says it’s important to consider “the impact of construction labor on the velocity of new home construction, as this is an indicator of long-term future housing supply.”
“The employment situation report, released earlier this month, reported an increase of nearly 8,000 residential construction jobs between February 2018 and March 2018, making March the best month for residential construction labor growth since August 2008,” he says. “The number of residential construction jobs is now 4.5 percent higher than a year ago.”
“The growth in residential construction jobs supports further improvement in the pace of home building because building a home does not readily lend itself to outsourcing and automation,” Fleming adds. “Additionally, while builders continue to voice frustration about the lack of developed lots and the rise in material costs, builder confidence remains high amidst strong buyer demand.”
