April 18 (UPI) -- U.S. home construction declined in March as a decline in new multi-family units dragged down rising singe-family home figures.
Overall housing starts fell to 1,420,000, down 0.8% from the revised February estimate of 1,432,000, according to data published Tuesday by the Commerce Department.
The rate of housing starts for single-family homes was 861,000, a 2.7% increase from the revised figure for February of 838,000. There were 1.05 million single-family homes completed last month, a 2.4% increase from February.
The March start rate for homes with five or more units, however, was 542,000 down from 620,000 in February.
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Building permits also declined by 8.8% falling to an annual rate of 1,413,000 from 1,550,000 in February.
Sector performance has been mixed due in part to increased lending rates that came from policies at the Federal Reserve meant to cool consumer-level inflation. A 30-year, fixed-rate interest was around 5% this time last year, but rates were closer to 6.3% as of April 13.
But against this year's trends, the National Association of Realtors reported existing home sales increased by 14.5% in February, the largest month-on-month percentage increase since July 2020 and ending a 12-month losing streak.
More recent data from the Mortgage Bankers Association, meanwhile, showed mortgage applications for a new home increased 0.6% from year-ago levels. Applications are up 10% from February.
"New home sales will be key to the housing market recovery in 2023 as they account for an increasing share of purchase activity as home builders maintain construction levels and offer concessions for buyers," Joel Kan, the deputy chief economist at the MBA, said Tuesday. "On the other hand, existing home inventory remains low as many current homeowners are locked in to their homes with a lower mortgage rate."
Forward trajectory for the housing sector depends in part on what happens at the Federal Reserve. The Fed hiked interest rates by 25 basis points last month despite concerns about a looming banking crisis as inflation remains about 3% above its target rate.
Consumer inflation over the 12-month period ending in March was 5%. Food and energy prices softened somewhat, but the biggest increase in inflation was for shelter, which rose 0.6%. Shelter makes up one-third of the weighting in the Consumer Price Index.
