Can’t Blame Winter: New Housing Starts Miss Expectations Despite Better Weather

Despite better weather, new housing starts in the U.S. rose less than expected in the month of March, again, while building permits fell, suggesting fundamental issues in the housing market.

The Commerce Department said on Wednesday new housing starts increased by 2.8 percent to a seasonally adjusted annual rate of 946,000. However, in a bit of better news, February’s housing starts were revised upward to a 1.9 percent rise. They were previously reported at a 0.2 percent fall.

Still, this month missed expectation again, and economists can no longer blame or scapegoat old father winter. Economists polled by Reuters forecasted new housing starts would rise to a 973,000-unit rate last month.

The new housing market has been, in some degree, weighed down by shortages of building lots and skilled labor, even as material prices continue to rise for builders.

A report released on Tuesday found more builders view market conditions as poor than favorable. The NAHB/Wells Fargo Housing Market index increased to 47 this month, down from a revised 46 in March, the National Association of Home Builders said on Tuesday in a statement.

But higher mortgage rates and increased housing prices are keeping would-be buyers on the sidelines. “Headwinds that are holding up a more robust recovery include ongoing tight credit conditions for home buyers and the fact that builders in many markets are facing a limited availability of lots and labor,” said the NAHB’s Chief Economist, David Crowe, in an email.

Groundbreaking for single-family homes, which represents the largest segment of the market, did increase 6.0 percent to a 635,000-unit pace last month. The more volatile measurement os multi-family homes fell 3.1 percent to a 311,000-unit rate, which was the lowest level since last October.

Permits to build homes fell 2.4 percent in March to a 990,000-unit pace. Permits for single-family homes rose 0.5 percent but fell 6.4 percent for the multi-family sector.