The first quarter ended with a thud for housing starts which fell a very steep 6.8 percent to a 1.215 million annualized rate which is the weakest since November. Posting similar declines were both single-family homes, at an 821,000 pace, and multi-family, at 394,000. But both components do show nearly double-digit year-on-year growth though quarter-to-quarter rates are only slightly positive.
Permits appear to be the positive offset in this report, up 3.6 percent in the month for a 1.260 million rate that hits Econoday's high forecast. But strength is entirely on the multi-family side, up 14 percent to a 437,000 rate, while single-family homes, which have more price punch, actually fell 1.1 percent to 823,000.
March data are often difficult when seasonal factors, including heavy weather, are often at play. But the weakness in starts and strength in permits do point to a possible and favorable theme for the first-half economy in general: weakness in the first quarter followed by a sizable rebound in the second. And a 1.5 percent gain in homes permitted but not started does hint at a coming rebound.
Optimism among home builders has been very strong and acceleration is beginning to appear in actual residential construction. Growth in single-family starts is rising at a mid-single digit pace with permits, in a strong positive for the new home market, moving at a double-digit pace. For multi-family units, starts are rising in the double digits though permits, after 5 years of steady and strong building, have begun to slow. Forecasters see housing starts in March falling back to a 1.262 million annualized pace but with building permits continuing to strengthen to a 1.250 million rate.