US homebuilding activity slows as expected in March

According to the Department of Commerce, in seasonally adjusted terms, housing starts dropped at a month-on-month pace of 0.8% in March to reach an annual rate of 1.420m (consensus: 1.405m).

Starts for the month before meanwhile were revised down from 1.45m to 1.432m.

However, weakness in starts was concentrated in those for homes with five units or more, as opposed to single-family starts which were up by 2.7% to 861,000.

Starts fell at a monthly pace of 23.6% in the Midwest and by 28.1% in the West, but jumped by 72.4% in the Northeast and by 6.8% in the South.

Meanwhile, housing permits - a lead indicator of future activity - fell by 8.8% over the month, reaching an annual rate of 1.413m (consensus: 1.455m), down from 1.55m in February.

"The bigger picture here is that residential construction activity merely is stabilizing, after cratering last year," said Kieran Clancy, senior US economist at Pantheon Macroeconomics.

"Housing starts across the first quarter fell at a 0.7% annualized rate, significantly slower than the 40% and 14% annualized declines in Q3 and Q4, respectively. A sustained recovery, however, remains a long way off, and total fixed investment still faces a significant drag from the likely sharp drop in capital spending this year."

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