New single-family home construction rose 2.7% in March as overall housing starts, which includes multifamily dwellings, declined 0.8%, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development said in a press release. 

Specifically, single-family homes were built at a seasonally adjusted annual rate of 861,000, compared to 838,000 in February. The March rate was down 27.7% from the 1,191,000 pace of March 2022. Multifamily residences went up at an annual rate of 542,000, compared to 581,000 in February, representing a 6.7% decline. Year over year, the March rate was up 6.1% from 511,000 in March 2022. 

Total housing starts were 1,420,000, compared to 1,432,000 in February. The pace was 17.2% slower than the 1,716,000 rate clocked in March 2022. 

“While builders still face several supply-side issues, in addition to a volatile mortgage-rate environment, there is reason for cautious optimism,” First American Deputy Chief Economist Odeta Kushi said. “Notably, builders are responding to the recent decline in mortgage rates and the persistent lack of existing-home inventory.” 

Permits, a leading indicator of future new-home supply, slid 8.8% month over month and 24.8% year over year to 1,413,000 units, while housing completions dipped 0.6% month over month and rose 12.9% year over year to an annual rate of 1,542,000.         

Looking ahead, RCLCO Real Estate Consulting Principal Kelly Mangold expects homebuilders to remain active. 

“As spring is a historically popular time for sales, builders may still look to increase their inventory in the coming months to hopefully capture buyers who may have been sidelined over the past year but are looking to finally enter the market,” she said.