Home Building Slows Down in March

The rise of Florida home loan rates don’t merely impact buyers and sellers. Builders have been feeling the brunt of the latest figures, as well.

According a Census Bureau report, housing starts slumped nearly 8 percent to an annual rate of 1.96 million in March (from a revised 2.13 million pace in February). Economists surveyed by Briefing.com had forecasted the rate would slip to 2.03 million last month.

It was the second-slowest pace of housing starts over the last 12 months, trailing only December.

Part of the slippage could be due to a burst of building activity in January, which was the strongest January on record in the United States. But higher mortgage rates have also contributed to cooler real estate markets across the country.

With the cooling of home buying - following a record year for home construction - there has been a significant build up in new homes available for sale on the market, according to a separate Census Bureau report. One in five builders has reported an increase in the cancelation of new home orders in recent months.

All of these factors have raised fears by some economists and Florida real estate experts that recent record home sales and sharp home price increases have led to a real estate bubble that may burst, sparking big price declines in many markets across the country.

Even if prices don’t decline, a slowdown in home building has big implications for the broader economy, as residential construction has been a particularly strong engine for consumer spending and job growth in recent years.

David Seiders, chief economist for the National Association of Home Builders, said that in light of those concerns and the increase supply of homes on the market, the slowdown in building is a good thing for the market.

“The unsold inventory numbers have been looking pretty flush, and we don’t want that to go too far,” he said. “I’ve been telling builders, ‘Hey we are in a cooling down process and you should behave accordingly.’ I am looking for housing starts and permits to slide gradually throughout the year from unsustainable heights last year.”

The slowdown in home building is greatest in the market for single-family homes, where starts fell to 1.59 million, the lowest since March 2005. The 12 percent slide in single-family starts compares to the 7.8 percent overall decline. Starts of home projects of five or more units rose 18 percent.

As home sales fall and prices rise around the state, there is some cause for concern. Many areas, however, are still ripe for anyone seeking a Florida home loan.