US homebuilding to rebound gradually through 2016

In March, homebuilding pace in the US dropped 105k units to 1098k. This is the lowest level in five months. The consensus forecast was for a drop to 1,166k. Meanwhile, January’s figures were revised downwards, while February’s figures were revised upwards. The single-family sector dropped by 77k in March, while multifamily construction pace also decelerated significantly, declining by 28k in March.

Meanwhile, building permits also declined 91k, the most since July 2015, to 1086k in March. Most of the drop was focused on the multi-family sector that fell by 82k, whereas permits for single-family declined moderately by 9k.

March’s report implies that US homebuilding has taken a break in the month following a strong growth in the previous month, noted TD Economics. Building permits also fell; however, the drop was more focused on the multi-family segment. Nevertheless, most of the falls seem to be due to unusual warm winter that pulled activity in the previous months, according to TD Economics.

However, the US housing starts outlook seems to remain favorable, noted TD Economics. Homebuilder sentiment continued to be high this month. Also the Beige Book indicated constant robustness in housing markets, showing that single family homes demand has risen, added TD Economics.

Furthermore, these trends will be underpinned by a growing strong labor market, rebounding consumer balance sheets, low interest rates and recovery in consumer formation. Also, homebuilding is likely to recover gradually through the rest of 2016, said TD Economics.