The recent upswing in residential sales likely helped restore builder confidence, lifting US housing starts in March more than 20% above the previous year’s level. Yet the sustainability of this surge is questionable, and housing starts continue to lag well behind the peak period, minimizing the benefit to the broader economy. See the following article from HousingWire for more on this.
Housing starts increased to a 16-month high in March, but some are warning that boost may not be sustained through the year.
After it appeared harsh winter weather took a toll on housing starts in February, revised data showed the annual rate of housing starts actually increased from January, according to data released by the Department of Housing and Urban Development (HUD) and the Commerce Department’s Census Bureau.
That increase continued into March’s preliminary numbers, with starts increasing 1.6% from the previous month. According to the monthly report, the seasonally adjusted annual rate of housing starts was 626,000 in March, up 1.6% from the revised February rate of 616,000 and 20.2% higher than the March 2009 rate of 521,000. The February rate was revised from 575,000, making February’s rate higher than the revised January rate of 611,000.
Single-family housing starts in March were at a rate of 531,000, down 0.9% from the revised February rate of 536,000. The March rate for units in buildings with five units or more was 88,000, the report added.
Paul Dales, a US economist at macroeconomic research consultancy Capital Economics said the rebound is a sign that recent burst of stronger home sales has tempted a few builders to ramp up construction again.
“Nevertheless, the level of starts is still little more than a quarter of the pace seen during the boom years and we may yet see a drop back later this year, after the housing tax credit expires and home sales drop back,” Dales wrote.
“However, the impact on wider economic growth would be pretty muted simply because residential construction now accounts for only 2% of GDP, less than a third of what it did during the boom years,” Dales added.
Privately owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 685,000, up 7.5% from February’s revised rate of 637,000 and 34.1% above the March 2009 estimate of 511,000. Single-family building permits were at an annual rate of 543,000, up 5.6% from February’s revised rate of 514,000. Permits for buildings with five or more units were at a rate of 120,000, up 13.2% from February’s revised rate of 106,000.
The one national building indicator that decreased was the rate of housing completions in February. Privately owned housing completions in March were at a seasonally adjusted annual rate of 656,000, down 3.1% from February’s rate of 677,000 and 8.9% below the March 2009 rate of 833,000. Single-family completions in March were at a rate of 486,000, up 5.9% from February, while the March rate for buildings with five or more units was 161,000, down from the February rate of 211,000.
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