Housing Starts Surge 7.0 Percent on Multi-Family Construction, Permits Fall 3.9 Percent

Housing starts surged by 7.0 percent to a seasonally adjusted annual rate of 1,036,000 in March from 968,000 in February, the U.S. Census Bureau at the Department of Commerce reported Tuesday. Analysts' estimates for housing starts ranged from 885,000 to 985,000 following a February pace that was first reported as 917,000. Starts are 46.7 percent above the March 2012 rate of 706,000. The increase was centered on higher multi-family units, which rose to a seven-year high. New construction for multifamily homes, including rentals such as apartment buildings as well as purchased units, such as condos, jumped 31 percent to an annual rate of 417,000. This was the most since January 2006. Many of these were larger projects, as the March rate for units in buildings with five units or more was 392,000. Meanwhile, single-family housing starts fell in March to a rate of 619,000; this is 4.8 percent below the revised February figure of 650,000. Three of four U.S. regions showed a gain in starts last month, led by a 10.9 percent increase in the South. Housing starts fell 5.6 percent in the Northeast. Note, however, that the regional housing starts figures have a high margin of estimating error around these figures. Permits for new construction fell. Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 902,000. Permits were projected to rise to 942,000, within a range of 905,000 to 990,000. The number of new permits is 3.9 percent below the revised February rate of 939,000, but is 17.3 percent above the March 2012 estimate of 769,000. Single-family authorizations in March were at a rate of 595,000; this is 0.5 percent below the revised February figure of 598,000. Authorizations of units in buildings with five units or more were at a rate of 283,000 in March. Perhaps one of the most important economic impacts from more housing starts is hopefully a gain in more jobs in construction, either for single-family or multi-family units. However, for the purchased home markets, more single-family houses built may alleviate tight inventories in some parts of the country. That may result in more home purchases, as the National Association of Realtors reports that low inventory levels have resulted in fewer sales. Low inventories have also contributed to price increases that, while welcome to current homeowners, can crimp the budgets of first-time buyers.