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Published: Wed, April 19, 2017
Economy | By Melissa Porter

US housing starts fell in March; still stronger than in 2016

US housing starts fell in March; still stronger than in 2016

Following an elevated February reading, nationwide housing starts fell 6.8% in March to a seasonally adjusted annual rate of 1.22 million units, according to newly released data from the U.S. Department of Housing and Urban Development and the Commerce Department.

However, while housing starts may be down, privately-owned housing units authorized by building permits increased in March to a seasonally-adjusted rate of 1.26 million. Compared to the first three months of previous year, construction is up 13.5% in the South, on strength in both single-family and multifamily units.

Inventory has remained scarce, with industry observers pointing to the high cost of construction, a hot rental market and large share of suitable housing held by investment firms as reasons for the lack of supply.

Building permits had been expected to climb by 3.1 percent to a rate of 1.250 million from the 1.213 million that had been reported for the previous month.

Building permits increased by 3.6% at a rate of 1.26 million, suggesting that construction may soon rebound. Single-family housing starts decreased 6.2 percent from February to 821,000.

"[These] numbers are aligned with our builder confidence metric, which contracted slightly this month but is on solid footing overall", says Granger MacDonald, chairman of the National Association of Home Builders (NAHB).

But strengthening demand and builder sentiment have yet to generate enough construction to sufficiently boost the availability of homes. Single-family authorizations in March were at a rate of 823,000, 1.1% below the revised February figure of 832,000 and 13.5% ahead of a year earlier. Total permits were up a healthy 10.4% in the first three months of 2017 from a year earlier, which bodes well for the construction sector in coming months.

There were 266,000 new homes for sale last month, up almost 10 percent from a year earlier.

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