Housing Starts Pulled Back in March but Have Exceeded 1.2 Million in Five of the Past Six Months

The Census Bureau and the U.S. Department of Housing and Urban Development said that new housing starts declined 6.8 percent in March. New residential construction activity fell from an annualized 1,303,000 in February to 1,215,000 in March. More importantly, it has exceeded 1.2 million in five of the past six months – a psychological threshold that we appear to have finally sustained. That suggests that the housing market continues to show some strength, even with some notable easing in the latest data. Along those lines, both single-family (down from 875,000 to 821,000) and multifamily (down from 428,000 to 394,000) starts were lower in March, with single-family activity decelerating from a pace not seen since October 2007.

On a year-over-year basis, new residential construction has risen 9.2 percent, up from 1,113,000 in March 2016. Single-family and multifamily activity was up 9.3 percent and 8.8 percent, respectively, over the past 12 months.

Meanwhile, housing permits rebounded somewhat in this release, up from 1,216,000 to 1,260,000. Since permits represent a proxy of future activity, this was encouraging. It was the seventh consecutive month with permits exceeding 1.2 million, so much like we see above in the starts figures, it looks like that threshold has been largely sustained. The underlying data in March were mixed. Single-family permitting edged down from 832,000 to 823,000; whereas, multifamily permits jumped from 384,000 to 437,000.

Much like the earlier figures, new residential construction permits have moved higher over the longer term. Over the past 12 months, housing permits have risen 3.6 percent, up from 1,077,000 units in March 2016, with single-family and multifamily activity up 13.5 percent and 24.1 percent, respectively.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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