New-home construction in the U.S. cooled in March to a four-month low as starts of single-family properties settled back from the strongest pace in almost a decade, Commerce Department data showed Tuesday.
Key Points
Residential starts decreased 6.8% to a 1.22 million annualized rate from a 1.30 million rate in February.Forecast was for 1.25 million rate; February's figure was revised from 1.29 million.Permits, a proxy for future construction, climbed 3.6% to a 1.26 million annualized rate in March.IBD'S TAKE: Homebuilders have market leaders in 2017, with D.R. Horton breaking out Monday past a buy point of 34.15 ahead of earnings later this week. D.R. Horton follows several other builders moving out of consolidations.
Big Picture
The construction data are volatile from month to month, made worse in this report by changing weather as the unusually warm February that boosted totals during that month gave way to a more seasonal March. Fundamentally, there's evidence of a strong outlook for the housing industry as homebuilder sentiment holds near the strongest level in more than a decade, and mortgage rates have eased from their postelection high. Builders are still contending with labor and lot shortages as they struggle to keep up with solid demand stemming from a strengthening labor market.
Advertisement
Economist Takeaways
"Builders are more upbeat than they have been since the height of the housing boom, with buyer traffic and sales both running at the best pace in years," Sam Bullard, an economist at Wells Fargo Securities LLC, said in a note before the report. "The backdrop for the near-term housing outlook is also encouraging as solid job growth and elevated levels of consumer confidence have put would-be homebuyers in a positive frame of mind."