Housing starts rose 2.8% in March from 920k to an annualized pace of 946k. Over the past twelve months, starts have fallen nearly 6%.

Housing Starts, year-over-year

Housing Remains Limited

The monthly rise was concentrated in single family starts up 6%. Multi-family starts on the other hand fell 3.1% in March, down 18.6% year-over-year.

Permits fell 2.4% in March, dropping from 1014k to 990k. Here too the weakness was centered on multi-family units with permits falling 6.4% this month. Single family permits on the other hand rose 0.5%.

On an annualized basis, permits are up 11.2% thanks to a near 37% rise in multifamily unit permits. Single family permits are down 1.2% year-over-year.

Building Permits, year-over-year

Housing Remains Limited

Bottom line: Housing data remains uneven at the end of the first quarter with little suggestion of underlying momentum building as we head into the spring selling season. While we expect sales to remain positive, demand is likely to be tempered by minimal income and tepid job creation. The temporary factors which spurred above-trend consumption - including rising equity markets, certainty in Washington - are still in play but have lost their potency, at least to some degree. Going forward, sustainable demand for housing will be a function of affordability. But amid even a minimal backup in mortgage rates, with tepid savings and limited income growth, many consumers will be priced out of the market.

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