Single-family housing starts in March were at a rate of 785,000, down 0.4 percent from the revised February figure of 788,000, according to data from the U.S. Census Bureau and the Department of Housing & Urban Development (HUD).
Privately-owned housing starts in March were at a seasonally-adjusted annual rate of 1,139,000, down 0.3 percent from the revised February estimate of 1,142,000 and down 14.2 percent from the March 2018 rate of 1,327,000.
Single-family authorizations in March were at a rate of 808,00, a 1.1 percent drop from the revised February figure of 817,000. Privately-owned housing units authorized by building permits in March were at a seasonally-adjusted annual rate of 1,269,000, a 1.7 percent dip from the revised February rate of 1,291,000 and a 7.8 percent tumble from the March 2018 rate of 1,377,000.
Single-family housing completions in March were at a rate of 938,000, an 11.9 percent increase from the revised February rate of 838,000. Privately-owned housing completions in March were at a seasonally-adjusted annual rate of 1,313,000, down 1.9 percent from the revised February estimate of 1,338,000, but up 6.8 percent from the March 2018 rate of 1,229,000.
Reaction to the data was mostly dreary.
"Despite the rebound in single-family housing starts, homebuilding activity remains at depressed levels historically–the current level would be consistent with housing troughs in previous housing cycles," said Tian Liu, Chief Economist at Genworth Mortgage Insurance. "The rebound in housing starts will be closely watched by federal policymakers because housing is an interest rate-sensitive sector and the rapid rebound in homebuilding activity will generate momentum in the rest of the economy and ease the concern about an economic slowdown."
“Housing construction disappointed in March and was mainly held down by an underperforming number for single-family starts,” said Joel Kan, the Mortgage Bankers Association’s Associate Vice President of Economic and Industry Forecasting. “At 785,000 units, single-family construction was essentially flat from a downwardly revised total for February, and was overall well below the 2018 pace of around 870,000 units. Despite a strong economy and job market, which continues to spur housing demand, homebuilders still face challenges such as labor shortages and high labor costs. These headwinds continue to slow the pace of construction, and on a year-over-year basis, single-family starts have fallen in five of the last six months.”
However, First American Financial Corp. Deputy Chief Economist Odeta Kushi saw a silver lining in the cloudy statistics, but not enough to forecast a sunny near-future.
“Homebuyers looking for more housing supply to choose from can take heart, as builders completed more homes compared with last year, inching closer to balancing inventory with demand,” Kushi said. “Yet, more is needed to make up for the shortage over the last decade. The year-over-year decline in single-family residential housing starts is a concern given the increasing demand from Millennial homebuyers for this type of construction. While permits and housing starts are both down compared with last year, this does not align with the expectations of homebuilders, who recently indicated positive sentiment for the spring homebuying season.”
Danielle Hale, Chief Economist at Realtor.com, also noted that home prices played a factor in the latest report.
“Higher home prices have eaten into some of the increased purchasing power driven by lower mortgage rates and higher incomes,” Hale said. “As a result, while some indicators show that buyers have more momentum than initially expected this year, affordability is still very top of mind and could help explain slower housing starts.”