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18 April 2017
U.S. builders broke ground on fewer homes in March, but the pace of
construction so far this year remains stronger than in 2016. The Total Investment & Insurance
Solutions
Housing starts fell 6.8 percent last month to
a seasonally adjusted annual rate of 1.22 million, the Commerce Department said
Tuesday. The setback came after strong gains in a warmer-than-usual February.
Groundbreakings on new homes are still 8.1 percent higher through the first
three months of this year compared with 2016. The Total Investment & Insurance Solutions
More Americans are seeking homes as job
security has improved with low unemployment. But even with a wave of
construction, a dwindling supply of new and existing homes across much of the
country has threatened to become a major drag on the housing market.
Jennifer Lee, a senior economist at BMO
Capital Markets, suggested that the March decline was likely temporary. The Total Investment & Insurance
Solutions
"Is it the start of a trend? Likely not,
given the strong demand for housing and the low levels of inventory to choose
from," Lee said.
Despite a winter storm last month, housing
starts increased in the Northeast largely because of apartment construction.
The pace of groundbreakings tumbled in the Midwest, South and West.
The March decline was likely due in part to
an unseasonably temperate January and February, which allowed builders to begin
construction earlier.
"Much warmer-than-usual weather in the
first two months of the year pulled starts forward into those months, and March
— with more normal temperatures — saw the payback with declines in both single-
and multifamily construction," said David Berson, chief economist at
Nationwide Mutual Insurance.
During the first three months of this year,
construction of buildings with at least five units — mainly apartment complexes
— has climbed 14.1 percent. Single-family housing starts have risen 5.9
percent.
More properties will likely begin
construction in the coming months. Building permits, an indicator of future
construction, rose 3.6 percent in March to an annual rate of 1.26 million.
U.S. homebuilders expect rising sales, though
they have become somewhat less optimistic. The National Association of Home
Builders/Wells Fargo builder sentiment index released Monday dipped to 68 this
month from 71 in March. Readings above 50 indicate more builders view sales
conditions as favorable rather than poor. The index has been above 60 since
September.
But strengthening demand and builder
sentiment have yet to generate enough construction to sufficiently boost the
availability of homes. That trend could temper sales growth and weaken
affordability, in part because the shortage of homes has pushed up prices.
There were 266,000 new homes for sale last
month, up nearly 10 percent from a year earlier. But sales of new homes rose 13
percent over the past year. The Total
Investment & Insurance Solutions
Purchases of existing homes have also
increased. Yet sales listings of existing homes dropped 6.4 percent over the
past year to 1.75 million properties in February, a figure only slightly higher
than in January when listings were at an all-time low.The Total Investment & Insurance Solutions
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