Census and HUD Data Indicates That Builders Are Not Bouncing Back

Builders appeared to have remained cautious about the housing market in March, pulling permits and starting construction on new houses in numbers little changed from February.

The monthly data on new residential construction jointly released by the U.S. Census Bureau and the Department of Housing and Urban Development on Tuesday reported that permits for privately-owned housing units were issued in March at a seasonally adjusted annual rate of 1,544,000, a scant 0.8 percent above the revised February figure of 1,532,000. This is 25.9 percent below the permitting rate in March 2006.

Permits for single family residences (SFR) as opposed to total SFR/multi-family dwelling figures, were issued at a slightly higher rate, 1,114,000 which was 1.4 percent above the revised February figure of 1,099,000.

Permits were pulled at an annualized rate of 244,000 in the Midwest, an increase of 16.7 percent over February and the Northeast increased 10.6 percent. In the other two regions the month-over-month figures were negative in every case. Changes year-over-year were down by double digits in every region.

Builders began building homes in March at an annualized rate of 1,518,000 compared to an annual rate of 1,506,000 in February, an increase of, again, 0.8 percent. The March figures were 23.0 percent lower than the rate of building starts one year earlier. Single family house starts did slightly better, increasing by 2.0 percent over February.

The Midwest was the superstar in this category. Single family starts increased 35.9 percent and total starts were up 44.5 percent over February. This may, in part, be related to the truly awful weather throughout the Midwest that pretty much stopped everything in its tracks in February. Every region was again lagging the start rate one year earlier with a range of 19.4 to 25.9 percent.

Nation-wide there were 1,195,000 residential units under construction in March. This was a slight (1.1 percent) decrease from a month earlier. There was, however, a pretty substantial decrease in the proportion of single family units in that total. One year ago, with 1,430 units under construction, 983 units were single family residences and 408 were in projects with five or more units. Last month the number of single family residences in progress was 760,000 while 402,000 units were in multi-family complexes. The Census/HUD data does not track properties with two to four units in this category.

The number of outstanding permits - those issued but under which no building has begun - increased 3.8 percent since February on a national basis and were up in every region except for the total figure in the South; again an indication that builders might have been planning on starting projects but were thwarted by the weather. Given the rotten start we have seen thus far in April it may be another two months before weather related influences can be wrung out of the system.