The number of US housing starts increased, but was less than expected while the number of building permits dropped in March. The article in aol.com points out this shows an underlying weakness in the housing market, and there are fears could continue in spite of the improving weather as spring progresses.
Figures from the Commerce Department show ground breaking increased by 2.8%, reaching a seasonally adjusted annual rate of 946,000. Economists had anticipated housing starts would increase to 973,000 in March, and this lower figure is disappointing. When figures are compared to March last year they show a drop of 5.9% which is the largest seen since April 2011. The number of housing starts in February was revised, and whereas it had been previously reported as a 0.2% full, new figures show an increase of 1.9%. The cold weather seen in December and January reduced building activity, and housing starts have also been affected by a shortage of skilled labor, building lots, and increases in prices of building materials.
A recent report shows house builders are still less optimistic about the property markets short-term prospects. The housing market is being affected by higher mortgage rates, and increases in house prices are deterring some buyers. Mortgage rates are higher than they were a year earlier, but wage growth is still slow and as a result many buyers looking to purchase lower-cost property have been priced out.
It’s not all gloom and doom, as another report by the Mortgage Bankers Association found applications for home loans increased last week, as interest rates declined slightly. Average rates for fixed 30 year mortgage were 4.47% for the week, compared to 4.56% a week earlier. The report also shows that mortgage applications for home purchases increased by 15% last month compared to February, although figures have not been seasonally adjusted.
Single-family homes account for the largest portion of the market, and ground breaking increased by 6% to reach 635,000 units last month. The multifamily homes sector is far more volatile, and ground breaking dropped by 3.1% to 311,000 units, the lowest level seen since October last year. The number of housing starts increased by 30.7% in the Northeast, and by 65.5% in the Midwest, but figures dropped in the West and the South. The number of permits issued to build homes dropped by 2.4% last month, to 990,000 units. The number of permits issued for single-family homes increased by 0.5%, but figures for multifamily homes dropped by 6.4%.