Sluggish March Construction: Housing Starts Drop, Highlighting Concerns for the Housing Market.

Published / Modified Apr 16 2024
Source: U.S. Census Bureau, CSIMarket Team / CSIMarket.com

The New Residential Construction report for March 2024 reveals a sharp decline in housing starts, indicating a slowdown in construction activity after a strong February performance.
Privately-owned housing starts dropped by 13.1% on a seasonally adjusted annual rate, totaling 1,321,000 units.
This figure is a significant 14.7% below the revised estimate of 1,549,000 units reported in February.

The largest decline in housing starts occurred in the Northeast region of the United States, primarily driven by a decrease in the construction of multi-dwelling buildings such as apartments.
Construction of new homes fell by 34.4%, reaching an annual rate of 348,000 units in the Northeast.
Additionally, the construction of multi-family units decreased by 23.7%, accounting for 22.63% of total construction.
This decline can be attributed to a declining demand for rented apartments.

The disappointing March figures are concerning, as they fall below the average rate of 1,389,548 housing starts.
Furthermore, the year-on-year comparison shows a 7.0% drop in housing starts compared to March 2023, with the Northeast region experiencing the most significant decline.

The issuance of building permits also deteriorated in March 2024, decreasing by 4.0% or 60,000 units to an annual rate of 1,321,000 units.
The decline in building permits was concentrated in the Northeast region and mainly affected single-family buildings.
Building permits in the Northeast fell by 21.2%, while permits for single-family houses declined by 5.6% to 1,022,000 units.

Building permits for single-family houses are considered a crucial indicator in the government's release.
Despite the downturn in March, it is worth noting that monthly building permits have increased by 3.2% over the past year, suggesting some underlying strength in the market.

The decline in housing starts and building permits reflect a sluggish construction activity in March, dampening the prospects of a robust housing market.
While the decline was concentrated in the Northeast region and mainly impacted multi-dwelling buildings and single-family houses, the broader economic implications are significant.

A healthy housing market can provide a substantial boost to the overall economy, as it generates jobs and increases consumer spending on related industries.
Therefore, it is crucial to closely monitor these figures in the upcoming months and assess whether this decline in construction activity is a temporary setback or represents a more substantial slowdown in the housing sector.

Overall, the March 2024 housing starts report paints a cautious picture for the construction industry, indicating a need for proactive measures to revive the housing market and its contribution to economic growth.


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