New US home construction slows in March

WASHINGTON: Construction of new US homes slowed in March to its slowest pace in four months, with the pace of building falling sharply in the Mid-West, the Commerce Department reported Tuesday.

Analysts had been expecting a slowdown following a surge in construction during the unseasonably warm winter months of January and February.

Total housing starts fell 6.8 percent for the month to a seasonally adjusted annual rate of 1.215 million, accord to Tuesday’s Commerce Department figures. A consensus forecast had called for a drop of only 2.9 percent.

Construction of single-family homes likewise sank 6.2 percent for the month. In the Mid-West, single-family homes tumbled 35 percent.

Overall, home building was still well above its pace from a year ago, adding 9.2 percent over March of 2016.

Meanwhile, the level of housing permits rebounded to its highest level since October, an annual rate of 1.26 million new houses, suggesting that the pace of construction could see a turnaround.

Analysts say the US economic recovery has produced an exceedingly tight housing market, with rising wages and steady job creation seeing more buyers enter the market and driving up prices.

Inventory has remained scarce, with industry observers pointing to the high cost of construction, a hot rental market and large share of suitable housing held by investment firms as reasons for the lack of supply.

However, March saw a second steep drop in the construction of apartments as buildings with five or more units fell 6.1 percent.

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