Dive Brief:
- Housing starts dropped 8.8% in March to a 1.09 million annualized rate, down from the revised 1.19 million rate in February, the Commerce Department reported Tuesday. March housing starts were still 14.2% higher than March 2015.
- New applications for building permits, which predict future construction activity, declined 7.7% in March but were 4.6% higher than March 2015.
- Single-family construction saw the steepest drop last month, with a 9.2% slide, and multifamily was close behind with an 8.5% decrease. Single-family starts dipped in all four U.S. regions in March.
Dive Insight:
March housing starts failed to meet expectations, as economists surveyed by Reuters predicted starts would only slightly slip to 1.17 million. Experts said March's disappointing results signaled "some cooling in the housing market" and echoed other economic indicators last month, including business spending and retail sales results that didn't reach predicted levels.
The drop in building permits was particularly concerning, as March was the lowest level of permits since March 2015. However, the plunge was due largely to an 18.6% decline in multifamily permits — a fact that echoes some predictions that single-family construction starts could outpace multifamily this year.
The dip in March housing starts comes one day after the NAHB/Wells Fargo Housing Market Index reported no change in the homebuilder confidence this month, which signaled that "builders remain cautiously optimistic about construction growth in 2016," NAHB Chief Economist Robert Dietz said in a release.
Today's report will be followed by the existing home sales report on Thursday, new home sales on April 25, and pending home sales on April 27.
