U.S. Housing Starts Approach Two-Year Low; Permits Weak

By on April 22, 2019

From St. Louis Post-Dispatch:  U.S. homebuilding dropped to a near two-year low in March, pulled down by persistent weakness in the single-family housing segment, suggesting the housing market continued to struggle despite declining mortgage rates.

Some of the weakness in homebuilding reported by the Commerce Department on Friday likely reflected disruptions caused by massive flooding in the Midwest, with housing starts in the region declining to levels last seen in early 2015. The report bucked a recent tide of upbeat data that indicated the economy regained speed as the first quarter ended.

Housing starts fell 0.3 percent to a seasonally adjusted annual rate of 1.139 million units last month, the lowest level since May 2017. Data for February was revised down to show homebuilding tumbling to a pace of 1.142 million units instead of the previously reported 1.162 million-unit rate.

Housing starts in the Midwest, which was devastated by floods during the month, dropped 17.6 percent.

Building permits fell 1.7 percent to a rate of 1.269 million units in March, the lowest in five months. Building permits have now declined for three straight months. Permits for single-family housing dropped to a more than 1½-year low in March, a bad omen for starts in the coming months.

Economists polled by Reuters had forecast housing starts increasing to a pace of 1.23 million units in March.

The prolonged weakness in homebuilding likely reflects land and labor shortages, as well as expensive building materials.

A survey on Tuesday showed that though builders reported strong demand for new homes, they continued to highlight “affordability concerns stemming from a chronic shortage of construction workers and buildable lots.”

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