New residential construction in the U.S. expectedly saw modest growth in the month of March, according to a report released by the Commerce Department on Tuesday.
The report showed housing starts rose by 0.3 percent to an annual rate of 1.793 million in March after spiking by 6.5 percent to an upwardly revised rate of 1.788 million in February.
The uptick surprised economists, who had expected housing starts to fall by 1.4 percent to a rate of 1.745 million from the 1.769 million originally reported for the previous month.
With the unexpected growth, housing starts once again reached their highest annual rate since hitting 1.802 million in June of 2006.
The modest increase in housing starts came as multi-family starts soared by 4.6 percent to a rate of 593,000, more than offsetting a 1.7 percent drop in single-family starts to a rate of 1.200 million.
Housing starts in the Northeast skyrocketed by 110.8 percent to a rate of 293,000, while starts in the West spiked by 7.7 percent to a rate of 434,000.
Meanwhile, the report showed housing starts in the Midwest plunged by 2.9 percent to a rate of 232,000, and starts in the South tumbled by 2.6 percent to a rate of 834,000.
The Commerce Department said building permits also climbed by 0.4 percent to an annual rate of 1.873 million in March after slumping by 1.6 to a revised rate of 1.865 million in February.
Building permits, an indicator of future housing demand, had been expected tumble by 1.8 percent to a rate of 1.825 million from the 1.859 million originally reported for the previous month.
Multi-family permits led the way higher, surging by 10.0 percent to a rate of 726,000, while single-family permits plummeted by 4.8 percent to a rate of 1.147 million.
Permits in the Northeast spiked by 11.1 percent to a rate of 190,000, and permits in the Midwest jumped by 2.8 percent to a rate of 258,000.
On the other hand, permits in the South edged down by 0.1 percent to a rate of 959,000, while permits in the West tumbled by 3.5 percent to a rate of 466,000.
“We expect housing starts to lose some momentum as 2022 progresses as a sharp rise in mortgage rates side-lines some buyers,” said Nancy Vanden Houten, Lead Economist at Capital Economics.
“Home builders also continue to face elevated construction costs due to persistent supply-chain pressures,” she added. “We look for starts to average about 1.64 million units in Q4, down from the Q1 pace of 1.75 million.”
A separate report released by the National Association of Home Builders on Monday showed a continued deterioration in U.S. homebuilder confidence in the month of April.
The report showed the NAHB/Wells Fargo Housing Market Index fell to 77 in April from 79 in March, with the decrease matching economist estimates.
The housing market index declined for the fourth consecutive month, sliding to its lowest level since hitting 76 last September.
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