Housing Starts Pass Million-Unit Pace on Multifamily Strength in March 2013

Despite falling 4.8%, single family starts remain unchanged in a three-month moving average, and on pace for a 25% gain over the course of 2013

Total US Housing Starts and Permits March 2013
Total US Housing Starts and Permits March 2013
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Soaring March production of multifamily apartments pushed nationwide housing starts beyond a million-unit pace for the first time since 2008, according to figures released by HUD and the U.S. Census Bureau.

Total starts rose 7.0 percent for the month due entirely to a 31.1 percent increase on the multifamily side to an annual rate of 417,000 units – their fastest pace since January 2006. Single-family starts fell 4.8 percent from a February number that was revised strongly upward.

“Today’s report is a reflection of the solid demand that many areas are seeing for rental apartments as young people take that first step into the housing market, which is a very positive development,” noted Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C. “The numbers are also in keeping with our latest surveys that show single-family builders are experiencing some difficulties in keeping up with rising demand for new homes due to increasing construction costs and other factors.”

Calling the latest data a “mixed bag” due to the opposite direction of single- and multifamily starts and a somewhat weaker amount of permit issuance, NAHB Chief Economist David Crowe said that nevertheless, the numbers indicate “a continuation of the slow, methodical march forward” that characterizes the housing recovery. He also noted that “The three-month moving average for single-family starts remained unchanged at 628,000 units in March – which is right on pace with NAHB’s forecast for a 25 percent gain in new-home production in 2013.”

While single-family starts declined 4.8 percent to a seasonally adjusted annual rate of 619,000 units in March, this was entirely due to a substantial upward revision to the previous month’s data, without which virtually no change would have been recorded.

Three out of four regions posted gains in combined single- and multifamily housing production in March:

  • Midwest: +9.6%
  • South: +10.9%
  • West: +2.7%
  • Northeast: -5.8%

Following a large gain in the previous month, total permit issuance fell 3.9 percent to a 902,000-unit rate in March. That decline reflected a 0.5 percent reduction to 595,000 units on the single-family side and a 10 percent reduction to 307,000 units on the multifamily side.

In contrast to regional starts, the Northeast was the only part of the country to post a gain in permitting activity in March:

  • Northeast: +24.7% to 101,000 units
  • Midwest: -2.1%
  • South: -6.2%
  • West: -10.4%