Results for housing starts and permits released this morning reflect a double dose of good news. First, the disappointing February numbers for starts were revised upward almost 5% from 1,236,000 to 1,295,000, while permits were also revised upward almost 2% from 1,298,000 to 1,321,000. The upward revisions bring February results closer to original expectations after a strong January. Second, March results improved over February’s revised numbers, with starts increasing 1.9% to 1,319,000 while permits grew 2.5% to 1,354,000. Impressively, both starts and permits showed sizable gains when compared to March of last year, with starts higher by 10.9% and permits higher by 7.5%.
While March results for both starts and permits were strong, with each number being the third highest result in the last 11 years, our enthusiasm is tempered as we analyze the breakdown of single family versus multi-family. It is well publicized that the residential market is facing a confluence of challenges including low inventory, constrained labor, and rising material costs, ultimately creating a growing bubble of pent up demand and affordability challenges. One way to address these challenges is through an increase in new single family homes. For March, single family starts dropped 3.7% to 867,000 from last month’s revised number of 900,000, while single family permits dropped 5.5% to 840,000 from last month’s 889,000. We would hope to see both single family numbers get to the point of sustained levels above 900,000 to gain confidence that inventory levels, demand and affordability were starting to be addressed.
The volatile multi-family results came in strong for March, with starts at 439,000, an increase of 16.1% over last month and 23.7% over last year.