The multifamily sector showed volatility in March but production of single-family homes remained unchanged, according to a report just released by the U.S. Commerce Department.
The National Association of Home Builders (NAHB) said that overall starts fell to a seasonally adjusted annual rate of 510,000 units, but this was due entirely to a 29% reduction on the multifamily side that largely offset a big gain in apartment and condo building in the previous month. This characteristic multifamily volatility pushed overall nationwide housing starts down 10.8% in March despite no change to single-family homes.
“While improving interest among potential home buyers has builders more optimistic these days, we don’t want to ramp up production until sales of new homes pick up,” noted NAHB Chairman Joe Robson. “A cautious attitude about new building is definitely what’s called for here, and that’s what most builders have wisely adopted for the time being.”
“Today’s numbers are right on target with NAHB’s forecast, which anticipates that housing starts will bottom out in the second quarter, after new-home sales have stabilized,” said NAHB Chief Economist David Crowe. “Single-family starts remained virtually unchanged over the past three months, indicating that we are closing in on a bottom. Multifamily starts – which tend to bounce around from month to month – were responsible for the decline in total starts as they readjusted following a substantial gain in February.”
Crowe noted that while builders have been seeing more sales office traffic and fielding more calls in recent weeks as consumers respond to historically affordable home buying conditions, many continue to grapple with a severe credit crunch for acquisition, development and construction financing (AD&C). “A substantial recovery in housing of the kind that’s required to help get the national economy back on its feet will not happen until the logjam in AD&C lending has been broken,” he cautioned.
While total housing starts declined 10.8 percent to a seasonally adjusted annual rate of 510,000 units in March, single-family housing starts remained exactly on par with the previous month, at a 358,000-unit rate. Multifamily starts declined 29 percent in the month to a 152,000-unit rate, erasing a large portion of the gain posted by that sector in the previous month.
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