Housing starts stalled in March on tariff and trade-war concerns, dropping 11.4% compared with February to a seasonally adjusted annual rate of 1.324 million, according to estimates from the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
However, housing starts were up 1.9% compared with March 2024.
Starts of detached, single-family homes were at a rate of 940,000, down 14.2% compared with February.
Starts of multifamily homes (five units or more per building) were at a rate of 371,000 – basically flat compared with March.
Building permits were up slightly: They increased 1.6% compared with February to reach an annual rate of 1.482 million. However, they were down 0.2% compared with March 2024.
Permits for single-family homes were at a rate of 978,000, a decrease of 2.0% compared with the previous month.
Permits for multifamily dwellings were at a rate of 445,000 in March, an increase of 10.1% compared with February.
Housing completions were at a seasonally adjusted annual rate of 1.549 million, down 2.1% compared with February but up 3.9% compared with March 2024.
“Builders pull back more than expected amid rising tariff uncertainty, as housing starts slump well below consensus expectations,” says Odeta Kushi, deputy chief economist for First American, in a statement. “Builders face persistent supply-side and affordability challenges, from higher material costs to a shortage of skilled labor. Residential building material costs are still more than 40 percent higher than pre-pandemic levels, making construction more expensive. Recent tariff actions could push costs even higher, with builders estimating an additional $10,900 per home. If these tariffs persist, builders will have no choice but to pass on the costs to consumers, who are already struggling with housing affordability.”
“The decline in starts aligns with builder sentiment,” Kushi says. “While overall builder sentiment inched up slightly in April, moving from 39 to 40, it remains in negative territory.”
“The slower pace of single-family permits suggests a reduced rate of groundbreaking in the upcoming months, due to higher inventory levels in key markets and ongoing challenges with costs and affordability,” she adds. “Optimism about single-family sales for the next six months fell by four points to 43, marking the lowest level since November 2023.”
Photo: Avel Chuklanov