Housing Starts Fell 10% In March

After surging unexpectedly in February, new home construction tumbled last month, according to government data released this morning.

Housing starts fell 10.8 percent in March compared with the previous month, to an annualized rate of 510,000. They are down 48.4 percent from the same period in March 2008. Home construction for single-family homes was unchanged, but it tumbled 42.6 percent for multi-family units such as condos and apartment buildings, according to the Commerce Department data.

The drop was bigger than expected by analysts hoping for early signs of a recovery in the housing market. Home construction had jumped more than 20 percent in February. “We expect activity to remain close to current levels for some time now,” said Ian Shepherdson, chief U.S. economist for High Frequency Economics. “A real recovery is still some way off but stabilization would represent progress.”

In the Northeast and Midwest, home construction increased 6 percent and 16 percent, respectively, in March. But it fell 17 percent in the South, which includes the Washington region, and 26 percent in the West.

Most important for analysts was the 9 percent drop in building permits, which can help forecast future demand. Permit levels are now at an all-time low, Mike Larson, a housing analyst at Weiss Research, said in a research note.

There continue to be too many homes on the market, dampening demand, said Larson. “Nothing in the latest data — especially the weak permitting figures — suggests an imminent rebound,” he said.

Source: Washington Post