US housing starts drop to a near two-year low

U.S. homebuilding dropped to a near two-year low in March, pulled down by persistent weakness in the singlefamily housing segment, suggesting the housing market continued to struggle despite declining mortgage rates.

Some of the weakness in homebuilding likely reflected disruptions caused by massive flooding in the Midwest, with housing starts in the region declining to levels last seen in early 2015. The report bucked a recent tide of upbeat data that indicated the economy regained speed as the first quarter ended.

Housing starts fell 0.3% to a seasonally adjusted annual rate of 1.139 million units last month, the lowest level since May 2017.

Data for February was revised down to show homebuilding tumbling to a pace of 1.142 million units instead of the previously reported 1.162 million-unit rate.

Housing starts in the Midwest, which was devastated by floods during the month, dropped 17.6%.

Single-family homebuilding, which accounts for the largest share of the housing market, dropped 0.4% to a rate of 785,000 units in March, the lowest level since September 2016.

Single-family homebuilding in the Midwest tumbled 21.2% last month to the lowest level since February 2015. Single-family starts also fell in the populous South. But they rose in the Northeast and West.

Building permits fell 1.7% to a rate of 1.269 million units in March, the lowest in five months. Building permits have now declined for three straight months.

Permits for single-family housing dropped to a more than 1-1/2-year low in March.

In related news, existing-home sales declined in March, following February’s surge of sales, according to the National Association of Realtors. Each of the four major U.S. regions saw a drop-off in sales, with the Midwest enduring the largest decline last month.

Existing-home sales fell 4.9% from February to a seasonally adjusted annual rate of 5.21 million in March. Sales were down 5.4% from a year ago (5.51 million in March 2018).

March existing home sales fell 7.9% in the Midwest and were off 8.6% from a year ago. Existing-home sales decreased in the Northeast by 2.9%, trailing behind March 2018 sales by 1.5%. Sales fell by 3.4% in the South and are down 2.1% from last year. In the West, existing home sales fell by 6.0% and are 10.7% below a year ago.