Mortgage Daily

Published On: April 17, 2018

Despite a surge in new apartment construction and permits, single-family activity weakened. The South led a decline in completed construction.

Privately owned housing units that were authorized in permit-issuing locations, including single-family and multifamily units, totaled 115,300 in March.

Including last month’s activity, the number of housing units that have been authorized so far this year amounted to 303,500.

The data were included in a new construction report jointly issued Tuesday by the Census Bureau and the Department of Housing and Urban Development.

Applying seasonal adjustments, the annual rate of permit issuance came to 1.354 million, increasing 2.5 percent from the upwardly revised rate in February and climbing 7.5 percent from March 2017.

But the month-over-month gain was limited to multifamily properties, with the annual rate on properties with at least five units soaring 22.9 percent to 473,000 and the rate on one-unit properties tumbling 5.5
percent to 840,000.

LendingTree Chief Economist
Tendayi Kapfidze noted in a written statement, however, that the three-month average for single-family permits was the highest since 2007 as builders responded to high demand.

Last month’s overall rate in the Midwest was 205,000, climbing from February by 9.0 percent — the biggest gain of any region. The West was up 3.0 percent to 379,000, and the South rose 2.1 percent to 632,000.

Only the Northeast was lower, with the annual rate retreating 5.5 percent to 138,000.

Last month ended with a seasonally adjusted 156,000 U.S. housing units authorized but not yet started.

Construction was started at a seasonally adjusted annual rate of 1.319 million in March 2018, inching up 1.9 percent from the upwardly revised rate a  month earlier and climbing 10.9 percent from the downwardly revised level a year earlier.

But, as was the case for permits, single-family construction starts were down from February, falling 3.7 percent to
867,000, while multifamily construction shot up 16.1 percent to 439,000.

Kapfidze said the shift towards multifamily could be a sign that rising rates and the tax changes have hurt affordability.

A seasonally adjusted 1.125 million units were under construction as of March 31.

Kapfidze speculated constrained inventories of new and existing homes should drive construction growth going forward.

Builders completed construction on 93,600 housing units last month, bringing the year-to-date total to 265,700.

On a seasonally adjusted basis,
construction was completed at an annual rate of 1.217 million, dropping 5.1 percent from the downwardly revised rate for February but inching up 1.9 percent from the upwardly revised number for March 2017.

The rate on one-unit properties fell 4.7 percent to 840,000, and the rate on apartments declined 5.8 percent to 371,000.

Completed construction in the South worked out to an annual rate of 586,000, sinking from February by a 10th — more than any region. A 3.3 percent decrease in the West put the rate there at 325,000.

But the rate inched up 0.6 percent in the Midwest to 160,000, while the rate in the Northeast climbed 7.4 percent to 146,000.

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