Today, the U.S. Census Bureau reported that there were 1,215,000 housing starts. Revisions to February increased to 1,303,000. Housing permits rose to 1,260,000 from a revised February print of 1,216,000.
Privately-owned housing starts in March were at a seasonally adjusted annual rate of 1,215,000. This is 6.8 percent (±12.5 percent)* below the revised February estimate of 1,303,000, but is 9.2 percent (±9.1 percent) above the March 2016 rate of 1,113,000. Single-family housing starts in March were at a rate of 821,000; this is 6.2 percent (±10.0 percent)* below the revised February figure of 875,000. The March rate for units in buildings with five units or more was 385,000.
Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,260,000. This is 3.6 percent (±2.8 percent) above the revised February rate of 1,216,000 and is 17.0 percent (±1.2 percent) above the March 2016 rate of 1,077,000. Single-family authorizations in March were at a rate of 823,000; this is 1.1 percent (±1.9 percent)* below the revised February figure of 832,000. Authorizations of units in buildings with five units or more were at a rate of 401,000 in March.
We are still seeing growth in single-family starts. Single-family starts are up 9.3% year over year which was a better print than last month’s report.
Multifamily construction has been cooling off from its torrid pace earlier in the cycle. We are seeing a noticeable lower growth in rent inflation in certain hot spots around the country. Rent inflation itself per the Consumer Price Index on 12-month percentage change hasn’t hit the peak levels of previous economic cycles.
Shelter inflation from the consumer price index is shown below:
I am hearing some express concern regarding the supposed massive oversupply of rentals in America. This is preposterous. The slowdown in multifamily construction since 2015 should alleviate some of these fears. The big spike in multifamily construction we saw in 2015 was largely due to the tax credit for 2 Unit buildings expiring. After that, even multifamily construction has been slow and steady.
From Calculated Risk
I expect to see a lot of headlines reporting on how disappointing this report is, but take those with a grain of salt. This housing cycle has not been not strong but instead slow and steady. This report supports the thesis of continued slow and steady in this sector.
Logan Mohtashami is a financial writer and blogger covering the U.S. economy with a specialization in the housing market. Logan Mohtashami is a senior loan officer at AMC Lending Group, which has been providing mortgage services for California residents since 1987. Logan also tracks all economic data daily on his own facebook page https://www.facebook.com/Logan.Mohtashami