NAHB Chief Economist David Seiders said that the report for March made it clear that, in this year’s first quarter, housing once again had provided “a solid contribution” to growth in the nation’s Gross Domestic Product.
Single-family starts in March climbed 7.7% to an annual rate of 1.41 million and the rate of multifamily construction during the month quickened to a pace of 366,000, a 10.6% gain.
The March resurgence in home starts, said Seiders, indicates that “it was indeed harsh winter weather that was largely to blame for the big decline in February,” and not an erosion of consumer confidence in housing or deteriorating market fundamentals. Worries over impending war in Iraq and a possible terrorist backlash also were negative factors for housing in February.
“The strength of March’s housing numbers suggests that very low interest rates have really helped and that we have excellent momentum going into the second quarter,” he said. Noting that “falling mortgage interest rates have been holding the housing affordability equation together,” Seiders said he expects “a long-term interest rise only gradually over the balance of the year, by about a half a percentage point, as the economy improves in the wake of success in the war effort. The Federal Reserve is likely to hold monetary policy steady until late in the year before gradually raising short-term rates.”
While the seasonally adjusted annual rate of housing permits dropped 7% in March, Seiders said that the decline was concentrated in the multifamily sector following a surge in those permits the month before. Single-family permits were down by 1%.
Regionally, housing starts climbed 9.8% to a rate of 157,000 in the Northeast; 25.4% to 355,000 units in the Midwest; and 9.4% to 827,000 units in the South. Starts registered a 4.5% decline in the West, to an annual rate of 441,000, but still remained above the pace a year earlier.
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