March Housing Starts Miss Mark, Permits Post Biggest Drop Since May

U.S. housing starts rose far less than expected in March as permits posted their biggest drop since last May, raising economists’ worries the economy won’t bounce back from a weak first quarter.

Groundbreaking increased by 2.0 percent to a seasonally adjusted annual pace of 926,000 units, according to a report released by the Commerce Department on Thursday. The report put to bed previous attempts to scapegoat poor data on bad weather, as the majority of the prior month’s decline remains intact.

Starts for single-family homes actually increased, but groundbreaking for the multifamily segment fell last month. February’s starts were revised up to a 908,000 million-unit pace from the previously reported 897,000-unit rate.

Economists polled by Reuters had forecast housing starts increasing to a 1.04 million-unit pace in March.

Meanwhile, new permits for future home construction fell by 5.7 percent to a 1.04 million-unit pace, though they have been above a 1 million-unit pace since July.

Regionally speaking, groundbreaking rebounded in the Northeast and Midwest, but tumbled 19.3 percent in the West and 3.5 percent in the South, where most of the home building takes place.

Last month, single-family homes groundbreaking, the largest component of the housing market, increased by 4.4 percent even as the multi-family homes component fell 2.5 percent.

Single-family permits rose 2.1 percent last month. Multi-family permits plunged 15.9 percent.