U.S. Housing Starts Top Forecasts on Multifamily Construction

Contractors work on the roof of a home under construction. Photographer: Luke Sharrett/Bloomberg

U.S. new-home construction rose by more than forecast in March on a rebound in multifamily starts, giving a boost to first-quarter economic growth, government figures showed Tuesday. Residential starts rose 1.9% to 1.32m annualized rate (est. 1.27m) after upwardly revised 1.3 mln pace in prior month. Multifamily home starts rose 14.4%; single-family fell 3.7%. Permits, a proxy for future construction of all types of homes, rose 2.5% to 1.35m rate (est. 1.32m) after 1.32m pace. The results show a tight job market, improved finances and consumers’ elevated confidence to purchase big-ticket items are supporting construction. That means homebuilding probably contributed to economic growth for the second consecutive quarter.

The strength in March was concentrated in multifamily construction such as apartment buildings. That category tends to be volatile; March’s advance in starts followed a 10.2% drop in the prior month. Permits for single-family homes were a weak spot, dropping 5.5%, the biggest decline in seven years, to the lowest level since September.