Steel Markets

Multi-family Construction Buoys Housing Starts

April 16, 2018

Housing starts increased more than expected in March due to a rebound in multi-family construction. Housing starts grew 1.9 percent from February to March to a seasonally adjusted annual rate of 1,319,000. Year-over-year, housing starts leapt 10.9 percent, reports the National Association of Home Builders.

Single-family housing starts were weak in March at a rate of 867,000, 3.7 percent below February’s revised rate of 900,000. The March rate for units in buildings with five units or more was 439,000, a 16.1 percent jump from February.

Regionally, starts edged upward in the Northeast by 0.8 percent and jumped 22.4 percent in the Midwest. Starts were down slightly in the South and West at -0.6 percent and -1.5 percent, respectively.

“The modest decline in single-family starts in March is still in line with our solid builder confidence readings and is largely attributable to lingering winter weather that is causing production delays in certain areas of the country,” said NAHB Chief Economist Robert Dietz. “With ongoing job creation, wage increases and rising household formations, we can expect continued, gradual strengthening of the housing market in the coming months.”

Bloomberg economists agreed that the outlook for housing is strong. “Fundamentals appear to support a positive outlook for the construction sector, despite labor constraints and rising material costs,” wrote Bloomberg economists Niraj Shah and Carl Riccadonna. “Demand should also be supported by a tight labor market and steady pay gains.”

Building permit authorizations climbed 2.5 percent from February to a rate of 1,354,000, up 7.5 percent from March 2017.

Single-family authorizations in March slid 5.5 percent from February to a rate of 840,000, but jumped 22.9 percent for housing with five units or more.

Regionally, authorizations declined 5.5 percent in the Northeast, but grew 9.0 percent in the Midwest, 2.1 percent in the South and 3.0 percent in the West.