National housing starts edged up 0.8 percent in March as the Midwest region rebounded from a sharp decline in February and posted a 44.5 percent increase for the month, the Commerce Department reported. The pace of housing starts for March was a seasonally adjusted annual rate of 1.5 million units, 23.0 percent below a year earlier.
Boosted by a 35.9 percent surge in the Midwest, construction of new single-family homes was up 2 percent in March to a seasonally adjusted annual rate of 1.2 million units. This was 24.6 percent below a year earlier. Multifamily housing construction decreased 3.8 percent for the month to a seasonally adjusted annual rate of 300,000 units and was down 16 percent from a year earlier.
“Builders, overall, have been systematically cutting back on new building activity for more than a year now,” said Brian Catalde, president of the National Association of Home Builders (NAHB) and a home builder from Southern California. “This slowdown is enabling them to reduce their inventory and better position themselves for the balance of the year, especially when faced with uncertainties over the impacts of the subprime-related tightening of mortgage lending standards on home sales.”
“This was the second warmest March on record, and the numbers for starts and permits undoubtedly were supported by this factor,” said NAHB Chief Economist David Seiders. “Furthermore, extreme gyrations in the numbers for the Midwest region have obscured underlying trends for several months.”
“Nationally, housing starts for the first quarter of this year were down by 5.5 percent from the final quarter of 2006 and nearly 30 percent below the first quarter of last year,” Seiders said. “NAHB’s forecast shows another modest decline in the second quarter, followed by a gradual recovery beginning around mid-year. We now expect total housing starts for 2007 to be down by 20 percent from last year.”
Regionally, construction of new homes and apartments in the Northeast, South and West was down by 6.1 percent, 2.7 percent and 7.7 percent, respectively. The 44.5 percent increase in the Midwest was the first increase the region posted in six months. All four regions reported a pace of construction well below a year earlier.
Permit issuance was up 0.8 percent for the month to a seasonally adjusted annual pace of 1.5 million units, a level that was 25.9 percent below a year earlier. Single-family permit issuance was up 1.4 percent to a pace of 1.1 million units for the month. This was 28.4 percent below a year earlier. The pace of multi-family permit issuance increased 1.6 percent to 440,000 units for the month, 17 percent below the March 2006 pace.