U.S. Housing Starts Plunge 11.4% In March, Much More Than Expected

(RTTNews) - A report released by the Commerce Department on Thursday showed new residential construction in the U.S. pulled back by much more than expected in the month of March.

The Commerce Department said housing starts plunged by 11.4 percent to an annual rate of 1.324 million in March after surging by 9.8 percent to a revised rate of 1.494 million in February.

Economists had expected housing starts to tumble by 5.4 percent to an annual rate of 1.420 million from the 1.501 million originally reported for the previous month.

With the much sharper than expected pullback, housing starts slumped to their lowest since hitting an annual rate of 1.305 million last November.

"Home construction was slightly slower than expected in March as home builders appear to be pacing themselves amid subdued expectations for home sales in the next six months as well as a high degree of uncertainty regarding tariffs going forward," said Nationwide Economist Daniel Vielhaber.

He added, "It's also possible that there was a natural pullback in the West and South regions following rebounds seen in January and February related to wild fires in California and winter weather in the South."

The steep drop by housing starts largely reflected a nosedive by single-family starts, which plummeted by 14.2 percent to an annual rate of 940,000. Multi-family starts also tumbled by 3.5 percent to an annual rate of 384,000.

Meanwhile, the report said building permits jumped by 1.6 percent to an annual rate of 1.482 million in March after falling by 1.0 percent to a revised rate of 1.459 million in February.

Building permits, an indicator of future housing demand, were expected to decrease by 0.4 percent to an annual rate of 1.450 million from the 1.456 million originally reported for the previous month.

Multi-family permits spiked by 9.3 percent to an annual rate of 504,000, more than offsetting a 2.0 percent slump by single-family permits to a rate of 978,000.

The National Association of Home Builders released a separate report on Wednesday unexpectedly showing a slight improvement by U.S. homebuilder confidence in the month of April.

The report said the NAHB/Wells Fargo Housing Market Index inched up to 40 in April after falling to 39 in March. Economists had expected the index to dip to 37.

With the unexpected increase, the housing market index regained ground after hitting a seven-month low in the previous month.