Housing Starts Rise as Warm Weather Brings Out National, Florida Mortgage Borrowers
Boosted by warmer weather, construction of new homes increased 0.8% in March to a seasonally adjusted annual rate of 1.518 million, the highest level this year, the Commerce Department estimated Tuesday.
Building permits also increased 0.8%, reaching a seasonally adjusted annual rate of 1.544 million last month. Permits had fallen in 12 of the previous 13 months.
The figures were slightly higher than expected by economists surveyed by MarketWatch. The median estimate for housing starts was 1.50 million, while permits had been expected to be at 1.52 million. See Economic Calendar.
Housing starts are down 23% from March 2006, while permits are off 26%. It’s a natural reaction to a slowdown in Florida mortgage activity.
The figures could show renewed optimism on the part of builders that the worst of the correction in the Florida housing market is behind them. But the month-to-month figures are too unreliable to make firm judgments based on one month.
“The freefall is over,” said Bob Walters, chief economist for Quicken Loans, who noted that starts have been in the range of 1.5 million for five months. “The steep plunge has now found a floor.”
But Bill Hampel, chief economist for the Credit Union National Association, tempered his enthusiasm, saying the March figures “will be the highest we’ll see for some time to come.”
Hampel said March’s starts were boosted by favorable weather, and he noted that home builders are “very pessimistic.” He expects flat-to-falling home prices.
On Monday, the National Association of Home Builders reported that builder optimism sank in April, with survey respondents warning that tighter lending standards for bad credit Florida home loans could prolong the slump through 2008.
Economists said that favorable weather in March compared with February probably had a major impact on construction. While February was colder and wetter than usual, March was warmer and drier in much of the nation.
Midwest surge in starts
Starts in the Midwest surged 44% last month, marking the biggest gain in 16 years. Starts in other regions fell between 3% and 6%.
Over the past five months, starts have averaged 1.52 million annualized, about the same as in the five months through February.
Starts of single-family homes increased 2% in March to a seasonally adjusted annual rate of 1.22 million. Permits for single-family homes rose 1.4% to 1.11 million annualized.
