New residential construction inched higher in March on the back of the multifamily sector, as single-family starts declined from the month before, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development said in a press release.
Single-family housing starts slid 1.7% from February’s revised estimate to 1,200,000, while multifamily starts jumped 7.5% to 574,000.
Altogether, the combined construction pace of single-family homes and buildings with five or more units was up 0.3% month over month, at 1,793,000 units. Starts were up 3.9% compared to a year ago.
First American deputy chief economist Odeta Kushi noted the strength of the multifamily sector relative to single-family and noted permits and completions were up for apartments as well as starts, while they were down for single-family homes. Nevertheless, the economist noted that single-family homes authorized but not started were up almost 15% year over year.
The seasonally adjusted annual rate for privately owned housing units authorized by building permits was at 1,873,000 in March, up 0.4% from February and 6.7% from a year earlier.
Privately owned housing completions hit an annual rate of 1,303,000 in March, 4.5% lower than February and 13% below a year before.
“Builders have a backlog of uncompleted homes to get through before they can break ground on new projects,” Kushi said. “In March, there were 811,000 single-family units under construction, the highest level since 2006.”
By region, single-family new construction varied across the U.S. On a month-over-month basis, it fell 12.3% in the Northeast, 2.6% in the South and 1.7% in the West and rose 7% in the Midwest.
Noting a four-month slide in homebuilder confidence, which has been hit by supply-chain disruptions and rising interest rates, Kushi argued that builders remain optimistic overall.
“it’s important to point out that homebuilder confidence is less ‘bullish’ as opposed to actually ‘bearish,’” Kushi said. “Builder sentiment remains higher than pre-pandemic, as several long-term trends continue to boost demand for new construction, particularly a growing labor market, demographic tailwinds from millennials entering their prime homebuying years and a lack of existing-home inventory.”