Housing starts and permits took a dive during the cold and snowy winter months, but numbers provided by the government this morning revealed that milder weather in March provided a much-needed shot in the arm for home builders.
Sentiment is holding at depressed levels in the industry based on yesterday’s release of home builder sentiment, but housing starts jumped a better-than-expected 7.2% in March to a seasonally adjusted annual rate of 549,000 units, while February was revised upward.
Single-family starts also increased by a similar amount.
Building permits, which are more forward looking, increased an impressive 11.2% to 594,000, also topping expectations. And the more closely-followed single-family permits figure, which removes the volatile multifamily sector and gives us a better read on the new home market, rose a respectable 4.5% to 405,000.
No doubt about it, the current level of permits and starts remains at depressed levels, but last month’s rise is suggesting that the industry is not headed to new lows.
Mortgage rates remain near historical lows and pricing is favorable, resulting in a near record level of affordability. And that suggests this is a great time for potential buyers to snag a great deal.
Still, there’s plenty of uncertainty. A downward drift in prices remains a headwind, and job creation, which has picked up in recent months, is not at levels that are needed to boost consumer confidence and provide a much needed boost to housing.
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