Nationwide housing starts rose 7.2 percent to a seasonally adjusted annual rate of 549,000 units in March from an upwardly revised number in the previous month, the U.S. Commerce Department reported. Coming on the heels of disappointing declines in February, this gain was represented in both the single- and multifamily sectors, and was mirrored by substantial improvements in building permit issuance for the same period.
"While the overall rate of new-home production remains quite low and is still being weighed down by significant uncertainties among both home builders and buyers, this latest report is encouraging," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "It means that some builders are cautiously beginning to re-stock their extremely thin inventories of new homes in anticipation of gradual improvement in consumer demand as the economy slowly inches toward recovery."
"The modest improvement in new-home production and permitting in March is in line with our forecasts for incremental gains through the spring buying season," said NAHB Chief Economist David Crowe. "While our builder members continue to experience a great number of challenges with regard to competition from foreclosed and short-sale properties, low appraisal values and tight credit conditions, they have noted slight improvements in interest among qualified buyers, and they need to be ready to meet the demand as it materializes."
Gains in new-home production were seen across the board in March, with upward movement registered in both the single- and multi-family sectors as well as three out of four regions. On the single-family side, a 7.7 percent gain to a seasonally adjusted annual rate of 422,000 units partially offset a big decline in the previous month. Multifamily starts also gained back a portion of the ground they lost earlier, with a 5.8 percent increase to 127,000 units.
Regionally, housing starts posted double-digit gains of 32.3 percent in the Midwest and 27.6 percent in the West, as well as a 5.4 percent gain in the Northeast. The South was the only region to post a decline in housing starts in March, 3.3 percent.
Meanwhile, issuance of building permits, which can be an indicator of future building activity, rose by an impressive 11.2 percent to a seasonally adjusted annual rate of 594,000 units, more than offsetting the previous month's decline. Single-family permits rose 5.7 percent to 405,000 units, while multifamily permits rose 25.2 percent to 189,000 units.
The Northeast was the only region to not post a gain in building permits this March, remaining unchanged from the previous month. Meanwhile, the Midwest posted a 6.9 percent gain, the South, a 6.3 percent gain, and the West, a 37.1 percent gain.