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US housing starts plunge, building permits hit one-year low
[WASHINGTON] US housing starts fell more than expected in March and permits for future home construction hit a one-year low, suggesting some cooling in the housing market in line with signs of a sharp slowdown in economic growth in the first quarter.
Groundbreaking decreased 8.8 per cent to a seasonally adjusted annual pace of 1.09 million units, the lowest level since October, the Commerce Department said on Tuesday. February's starts were revised up to a 1.19 million-unit rate from the previously reported 1.18 million-unit pace.
Economists polled by Reuters had forecast housing starts slipping to a 1.17 million-unit pace last month.
Last month's drop in groundbreaking pointed to a moderation in housing market activity and mirrors other data such as business spending, trade and retail sales that have suggested economic growth stalled in the first quarter.
The economy has been slammed by a strong dollar and weak global demand, which have weighed on exports. Lower oil prices are also a drag as they have undercut profits of energy firms, causing a sharp decline in spending on capital projects.
Still, housing market fundamentals remain strong against the backdrop of a buoyant labor market, which is increasing employment opportunities for young adults, and in turn boosting household formation.
Last month, groundbreaking on single-family housing projects, the largest segment of the market, tumbled 9.2 per cent to a 764,000-unit pace, the lowest since October.
Single-family starts fell in all four regions last month, sliding 4.9 per cent in the South, where most home building takes place. Housing starts for the volatile multi-family segment declined 7.9 per cent to a 325,000-unit pace.
Building permits dropped 7.7 per cent to a 1.09 million-unit rate last month, the lowest level since March last year. Permits for the construction of single-family homes decreased 1.2 per cent in March, while multi-family building permits plunged 18.6 per cent.