Steel Markets

Weak Housing Construction Report for March

April 23, 2019

Housing starts showed continued weakness in March, dipping 0.3 percent from February’s downwardly revised data to a seasonally adjusted annual rate of 1,139,000. Housing starts were 14.2 percent below the rate in March 2018.

Single-family home starts dipped 0.4 percent from the previous month to the lowest level since September 2016. Starts for multi-dwelling homes of five units or more slid 3.4 percent. Total starts declined in the Northeast, Midwest and South, but jumped 31.4 percent in the West. Single-family starts rose 18.8 percent in the Northeast and 13.9 percent in the West. A decline of 21.2 percent was seen in the Midwest and 2.8 percent in the South.

“On a year-to-date basis, single-family construction is 5.3 percent lower than the first quarter of 2018,” said National Association of Home Builders chief economist Robert Dietz. “NAHB’s forecast and the forward-looking HMI suggest that future data will show stabilization followed by slight gains due to recent declines in mortgage interest rates. However, single-family permits continued to be soft in March, declining 1.1 percent for the month to an 808,000 annual pace, the lowest since August 2017.”

Building permit authorization, a measure of future construction, fell 1.7 percent from February revised to a SAAR of 1,269,000 and was 7.8 percent below the rate in March 2018. Permits for single-family housing and those of five units or more both declined last month, dropping 1.1. percent and 2.7 percent, respectively. The West was the only region to post an increase in authorizations, jumping 10 percent in March

“Recent production declines are clear in the current estimates of units under production. As of March 2019, there were 531,000 single-family homes under construction,” noted Dietz. “While this is 4.5 percent higher than a year ago, it is down from the 543,000 peak count from January 2019. Similarly, there are currently 595,000 apartments under construction, which is more than 3 percent lower than a year ago and down from the peak count of 625,000 in February 2017.”