New-home construction remains slow in March

The pace of new-home construction continued to disappoint in March, though building permits and housing starts for single-family homes did rise slightly from February’s poor numbers.

Apartment and multifamily sector, the brightest spot in the housing recovery so far, could see a cooling off.

Total housing starts jumped just 2 percent to 926,000 from 908,000 in February, the Commerce Department reported Thursday.

Overall permits fell 5.7 percent for the month to 1,039,000, but that was driven by a deep dive in multifamily permits, down nearly 16 percent. Single-home permits increased just more than 2 percent to 636,000, and only fell in the West region.

A healthy housing market produces about 1 million to 1.5 million replacement homes each year.

The data continues to give off mixed signals for the year. Earlier this week, the National Association of Home Builders (NAHB) reported in its monthly survey that builders were more optimistic about current and future sales and buyer traffic. That optimism, however, is “cautious,” NAHB Chief Economist David Crowe wrote in a blog post.

New-home prices are increasing with the rising costs for building lots, construction and subcontracting labor and materials.

On a year-over-year basis, the pace of construction also showed weakness.

Housing starts were down 2.5 percent in March from a year ago, and housing completions are estimated to be down nearly 6 percent from the previous year. Home completion data, however, has a high margin of error.