After the worst month for housing starts in years, overall starts rose modestly in March, though multi-family starts and permits still struggled, according to new findings by the National Association of Homebuilders.
NAHB chief economist David Crowe said Thursday that total housing starts increased 2 percent last month, to an annual rate of 926,000. Single-family starts fared best, improving 4.4 percent to 618,000, from a “virtually unchanged 592,000 in February.”
The uptick in single-family starts, however, belies a continued drop in multifamily starts. According to the NAHB, multi-family starts in March dropped to their lowest annualized monthly figure since September 2013‒‒308,000. Virtually all of this decline occurred in the West, though there was a small downturn in the South as well.
Permits were also down overall in March, though not everywhere. Overall, permits dropped 5.7 percent, driven by a 15.9 percent loss in multifamily that was evenly spread across the West, South, and Midwest, Crowe said. However, multifamily permits in the Northeast rose 55 percent to 90,000, their highest level since the late-bubble days of June 2008, “when a code change caused a one-time jump,” Crowe said. “The remaining three regions accounted for a 108,000 fall, offsetting the 48,000 increase in the Northeast.”
Single-family permits rose 2.1 percent to 636,000, with the only decline happening in the West, according to the NAHB. That region dropped 2 percent (about 3,000 permits) to 146,000 in March.
Though the gains in starts and permits are modest‒‒not to mention multi-faceted‒‒the upturn is certainly more welcome news to industry pundits than the numbers that came from February. That month, the U.S. Census Bureau and U.S. Department of Housing and Urban Development reported that privately-owned housing starts had hit their lowest rate in years. Housing starts were down 17 percent from January and 3.3 percent below the February prior.
“The meager rise in single-family starts and permits reflects builders’ caution as the recovery continues to move in a positive, but relatively slow, forward direction,” Crowe said.
Still, rising costs for building lots, contracting, labor, and materials have put pressure on home prices at a time when buyers are still shaking off the aftereffects of the recession and wages are showing only modest gains, he said. “Tight underwriting has removed some potential buyers, further limiting the pool of those able to buy.”