Housing Starts Increase in March Led by Multifamily Construction

Total housing starts increased slightly in March, led by multifamily construction strength. Starts increased 1.9% to a 1.32 million seasonally adjusted annual rate, according to the joint data release from the Census Bureau and HUD.

However, the pace of single-family starts declined in March, falling 3.7% to an 867,000 seasonally adjusted annual rate, due to lingering weather effects in some parts of the nation. The three-month moving average for single-family starts remained near a post-recession high rate of construction (889,000). These recent trends for single-family starts match ongoing healthy levels of the NAHB/Wells Fargo Housing Market Index, now registering a score of 69.

For the first quarter of 2018, single-family starts are 7% higher than this time in 2017, in-line with forecast for modest gains. Single-family permits were down 5.5% in March, although are recording a 5.3% improvement thus far in 2018 relative to this time in 2017.

Multifamily starts (2+ unit production) were up 14% in March, posting the largest seasonally adjusted rate (452,000) since October 2016. Multifamily permits for 5+ unit production also showed strength, gaining 23% over the February rate. Multifamily data tends to be volatile in the month-to-month data, but the three-month moving average for multifamily construction is now at its highest register since February 2017. Our forecast calls for flat multifamily construction conditions in 2018.

With respect to housing’s economic impact, 55% of homes under construction in March were multifamily (621,000). The current count of apartments under construction is roughly unchanged over the last year. In March, there were 504,000 single-family units under construction, a gain of almost 11% from this time in 2017.