Housing starts plunge in March
Groundbreakings on single-family homes held steady for the third month in a row in March, even as the number of condominium units and apartments under construction fell sharply, according to federal data released Thursday.
It was the second straight day of relatively good news on the housing front and helped the Dow Jones industrial average rise 1.19% to 8,125.43 on Thursday. Shares of Southern California home builders KB Home and Ryland were both up at the close of trading.
Economist Edward Leamer, director of UCLA’s Anderson Forecast, said the stability in single-family home construction is a positive sign.
“The downward trend we’ve been seeing for a long time isn’t evident anymore,” Leamer said. “We won’t know if we’ve really hit the bottom for a couple of months, but this is certainly consistent with being near the bottom.”
Nationwide, builders began work on 358,000 single-family homes in March, about the same as in January and February. In the West, developers started 73,000 single-family homes, a 3.3% bump over the previous month.
But not all the news was good. Construction began on 152,000 apartment buildings nationwide in March, down nearly a third from the previous month and 51% from a year earlier. In the West, builders began work on just 10,000 multi-family buildings in March, a fourth of those that were started in February and down even more from the previous year.
That, along with the fact that there’s still less construction going on now than there was last year, brought the overall numbers for new housing down 48% nationwide over the same month in 2008.
U.S. builders began work on 510,000 houses and apartment buildings last month, down dramatically from the 988,000 residences that were started the previous March. It was the second-worst month since the federal government began keeping records in 1959. In the West, a region that includes 13 states west of the Rocky Mountains, the dearth of multi-family groundbreakings helped bring the total down by 67% over March 2008.
The March news offset a surprising increase in housing starts that had been reported in February, when a spurt of apartment construction in the Northeast nudged the total up 17% over the previous February.
Building permits issued in March also dropped by nearly half, falling 45% nationwide from a year earlier to a total of 513,000. Permits in the West were down 46% in March from the previous year.
David Crowe, chief economist of the National Assn. of Home Builders, predicted that new construction overall would begin to recover in the second quarter of this year.
“We are closing in on a bottom,” Crowe said.