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Multifamily Boosts Housing Starts in March

Led by a surge in multifamily building, housing starts jumped 7.0 percent in March to a seasonally adjusted annual rate of 1,036,000, the highest level since June 2008, while housing permits dropped 3.9 percent to 902,000, the lowest level since November, the ""Census Bureau and HUD"":http://www.census.gov/construction/nrc/pdf/newresconst_201303.pdf reported jointly Tuesday.

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The increase in starts tracked permits in February, which rose then to the highest level since June 2008. In February, multifamily activity represented 60 percent of the increase in permits, while in March, all of the multifamily units accounted for all of the increase in starts as single-family starts fell. Single-family starts dropped 4.8 percent to an annual rate of 619,000 in March, while multifamily starts increased 31.1 percent to 417,000.

Economists had expected the report to show 942,000 permits--down from the original February report of 946,000--and 930,000 starts, up from February's originally reported 917,000.

Starts for February were revised up to a seasonally adjusted annual rate of 968,000, while permits were revised down to 939,000.

According to the report, builders completed 800,000 new homes in March, up 11.0 percent from February and the highest level since November 2009. Completions of multifamily units accounted for 81.1 percent of the increase, but nonetheless, builders completed 593,000 single-family homes in March, the highest level since June 2010 when builders completed 684,000 new single family homes in the midst of the federal homebuyer tax credit incentive.

The Census-HUD report came one day after the National Association of Home Builders (NAHB) ""reported"":http://dsnews.comarticles/weak-prices-drop-builder-confidence-for-3rd-straight-month-2013-04-15 the third consecutive month-over-month drop in its Housing Market Index, a measure of builder confidence.

The ""new residential construction"" report, as it is titled by the government, showed a continuation of the movement to multifamily housing.

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In the last 12 months, single-family permits have averaged about 63.9 percent of all permits, down from 66.0 percent in the previous 12 months. Similarly, single-family homes accounted for 67.8 percent of all starts, down from 70.2 percent in the previous 12 months.

While the trajectory for both starts and permits shows a clear increasing pattern, residential construction activity remains far below pre-recession levels.

Single-family permits peaked at 1,798,000 in September 2005, almost three times the 595,000 single-family permits reported for March. Single-family starts peaked at 1,823,000 in January 2006, also almost three times the 619,000 single-family starts in March.

The absolute improvement in housing starts is good news for the beleaguered construction sector. According to the Bureau of Labor Statistics (BLS), the number of all construction jobs was up 18,000 in March to 5,802,000, the highest level since August 2009. In March, according to the BLS, the number of residential construction jobs improved by 2,300 to 578,100, the highest level since May 2010 and the number of residential specialty contractor jobs increased 12,500 to 1,543,700, the highest level since August 2009

According to the Census-HUD report, builders completed 578,000 single-family homes in February, up slightly from the originally reported 574,000 and 167,000 more than the number of new single-family homes sold. Census-HUD will report new home sales for March next Tuesday. The NAHB survey showed buyer traffic--one of the three components of the Housing Market Index -- increased slightly in March but fell in April in its lowest level since September.

Total starts rose in March in three of the four Census regions, falling only in the Northeast, where starts dropped 6,000 to 98,000. Starts rose 55,000 in the South to 560,000; 13,000 in the Midwest to 149,000; and 6,000 in the West to 229,000.

Single-family starts improved only in the Midwest, up 9,000 to 104,000, while falling 21,000 in the Northeast to 43,000; 16,000 in the South to 336,000; and 3,000 in the West to 136,000.

Total permits rose only in the Northeast, up 20,000 to 101,000, while dropping 30,000 in the South to 452,000; 24,000 in the West to 207,000; and 3,000 in the Midwest to 142,000. Single-family permits rose only in the South, up a scant 2,000 to 319,000, while falling 4,000 in the West to 135,000 and 1,000 in the Northeast to 48,000. Single-family permits in the Midwest were unchanged at 93,000.

_Hear Mark Lieberman every Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:20 am Eastern Time._

About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.
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