Led by apartments, homebuilding picked up in March

WASHINGTON — U.S. builders broke ground on more apartment buildings last month, pushing up overall home construction 1.9 percent.

The Commerce Department said Tuesday that housing starts rose in March to a seasonally adjusted annual rate of 1.32 million, driven by a 16 percent gain in apartment buildings. Single-family home construction slipped 3.7 percent. Home construction has grown steadily since the housing crash bottomed out in 2012 and has emerged as a potential source of long-term economic growth. The pace of homebuilding is still below its long-run average of about 1.5 million houses and apartments a year. And millennials are increasingly moving out on their own and seeking to buy homes.

“It is still a case of demand outpacing supply in the housing sector, which bodes well for construction,” said Jennifer Lee, an economist at BMO Capital Markets.

The construction of singlefamily homes typically has more economic impact than building apartments because it employs more people.

Single-family home construction was up 5.2 percent compared with a year earlier. The overall construction of houses and apartments rose nearly 11 percent in March from a year earlier, the government said.

Builders are struggling with conflicting trends in the housing market. There is a shortage of existing homes, which has pushed up prices in cities around the country. The number of existing homes available for sale in February plunged 8.1 percent from a year before. That’s lifting demand for new homes.

At the same time, mortgage rates have risen steadily in the past year. The average 30-year fixed rate rose to 4.42 percent last week, up from an average as low as 3.78 percent in early September, according to mortgage buyer Freddie Mac, the Federal Home Loan Mortgage Corp.

Builders have complained that a shortage of construction

workers and the limited availability of land has hindered new building.

Homebuilders remain confident despite the crosscurrents, though there are some hints of concern. A measure of builders’ optimism, the National Association of Home Builders/Wells Fargo builder sentiment index, fell one point in April to 69, the fourth consecutive month of decline. Any reading above 50 indicates that more builders see sales conditions as good

rather than poor.

On a regional basis, housing starts ticked up in the Northeast and surged in the Midwest. They fell slightly in the South and West.

Building permits, an indicator of future construction, also rose last month, increasing 2.5 percent to a seasonally adjusted annual rate of 1.35 million. Permits numbers were lifted by apartment buildings, which jumped nearly 23 percent. Single-family home permits fell 5.5 percent.