Housing starts fell 10.8% to a seasonally adjusted 510,000 annual rate compared to the prior month, the Commerce Department said Thursday. The drop was driven by lower apartment construction. Single-family starts were flat, after a slight increase the month before.
Starts climbed 17.2% in February to 572,000; originally, Commerce reported February starts rose 22.2% to 583,000. Mild weather and apartment construction ignited a surprise surge that, while taken with a grain of salt, had been welcomed as a sign the recession wasn't deepening and the housing market might be nearing a bottom.
Year over year, housing starts were 48.4% below the pace of construction in March 2008.
The large decline in starts during March acted like a wet blanket over hopes the housing industry was near bottom. February new-home sales had gone up 4.7%. Just Wednesday, a trade group of builders released a survey showing confidence way up, albeit at a historically low level. The National Association of Home Builders index of builder sentiment in new-home sales prospects soared to 14 in April from nine in March.
Thursday's report on housing showed building permits in March decreased 9.0% to a 513,000 annual rate. Economists had expected permits to fall by 2.5% to a rate of 550,000. February permits rose 6.2% to 564,000.
Single-family starts were unchanged at 358,000, after rising 0.6% in February. Construction of housing with two or more units dropped 29.0% to 152,000; within that category, groundbreakings of homes with five or more units -- or multi-family -- were 42.6% lower.
Regionally, housing starts declined 16.8% in the South and 26.3% in the West. Construction rose 6.3% in the Northeast and 15.9% in the Midwest.
Nationwide, an estimated 41,900 houses were actually started in March, based on figures not seasonally adjusted. An estimated 44,000 building permits were issued last month, also based on unadjusted figures.