US housing starts fell in March; still stronger than in 2016

WASHINGTON (AP) — U.S. builders broke ground on fewer homes in March, but the pace of construction so far this year remains stronger than in 2016.

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.

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.

“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.