Housing starts plunge in March

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Housing starts plunge in March

By Andy Carlo - 04/16/2020
Housing starts tumbled 22.3% in March to a seasonally adjusted annual rate of 1.216 million from a revised February estimate of 1.564 million, according to the latest report from the U.S. Department of Commerce.

While total starts remain 1.4% above the March 2019 rate of 1.199 million, the March 2020 report provides a blueprint of the COVID-19 pandemic's impact on residential construction.

Single‐family housing starts in March were at a rate of 856,000, falling 17.5% below the revised February figure of 1.037 million. The March rate for units in buildings with five units or more was 347,000.

The multifamily sector, which includes apartment buildings and condos, decreased 31.7% to a 360,000 pace.

“Housing has been deemed an essential business in most of the nation, and in the few states where the governors have not acted, we urge them to deem construction as essential,” said said Dean Mon, chairman of the National Association of Home Builders (NAHB).  “Housing can help lead an eventual rebound, as it has done in previous recessions.”

Housing permits in March were at a seasonally adjusted annual rate of 1.353 million, which is 6.8% below the revised February rate of 1.452 million. The March rate is 5% above the March 2019 rate of 1.288 million, however.

Single‐family authorizations in March were at a rate of 884,000, which is 12% below the revised February figure of 1.005 million. Multifamily permits increased 4.9% to a 469,000 pace, however.

An additional descent in housing numbers is likely on the way, according to the NAHB.

“We expect further declines in housing starts in April, due to the unprecedented decline in builder confidence in our latest member survey,” said NAHB Chief Economist Robert Dietz.

But Dietz also noted that there are currently 534,000 single-family homes currently under construction and 684,000 apartments. Approximately 90% of these single-family units are located in states where home building is deemed as an ‘essential service,’ while 80% of apartments are located in the same states.

March 2020 Starts by region:

  • In the Northeast, total starts fell 42.5% as single-family starts decreased 17.5%.

  • In the Midwest, total starts dropped 21.5% as single-family starts declined 25.7%.

  • In the South, total starts are down 21.3% as single-family starts fell 24.5%.

  • In the West, total starts declined 18.2% as single-family starts increased 6.1%.

March 2020 Permits by region:

  • In the Northeast, total permits fell 7.6% as single-family permits declined 13.2%.

  • In the Midwest, total permits decreased 12.7% as single-family permits dropped 18.4%.

  • In the South, total permits are down 3.1% while single-family permits fell 6.4%.

  • In the West, total permits 10.5% and single family-permits decreased 20.2%.

Yesterday provided a preview of the construction climate as the latest NAHB/Wells Fargo Housing Market Index (HMI) fell 42 points in April.