Total housing starts declined in March, after a strong pace was recorded in February. Total starts were down almost 7%, falling to a 1.215 million seasonally adjusted annual rate, according to the joint data release from the Census Bureau and HUD.
Single-family starts posted a monthly decline of 6% in March, falling to an 821,000 annual rate. The February annualized rate, 875,000, was the fastest monthly pace since the Great Recession, while the March rate ranked fourth. Single-family permits were down 1% in March, but recorded the third largest annual pace since the recession. Unseasonably warm weather for much of the country in February, followed by snow in March, likely affected the February-to-March changes.
As measured on a three-month moving average, the data are consistent with recent trends in the NAHB/Wells Fargo measure of single-family builder confidence. The three-month moving average of single-family starts reached a post-recession high in March, and NAHB is forecasting continued growth for this sector as the year progresses.
Multifamily starts declined again in March. Total multifamily starts fell 8% to a 394,000 seasonally adjusted annual rate. However, multifamily permits recorded a nearly 14% increase in March. NAHB is forecasting that multifamily development will continue to level off over the course of 2017.
Focusing on housing’s economic impact, 58% of homes under construction in March were multifamily (631,000). This multifamily count is almost 12% higher than a year ago. There were 454,000 single-family units under construction, a gain of 6% from this time in 2016. This is the highest count of single-family units under construction since the fall of 2008.
Regionally, single-family starts posted a month-over-month gain in the South (3%) and were flat in the Northeast. Single-family starts were down 35% in the Midwest and 6% in the West. The Midwest decline was likely related to the positive weather in February followed by less favorable conditions in March.
Today’s numbers are consistent with NAHB’s 2017 forecast, which indicates continued growth for single-family construction (limited by availability of workers and lots) and continued leveling off of multifamily production in the year ahead. Recent increases in lumber prices are an item to watch going forward.