A strong increase in the number of housing starts during the last month of the first quarter failed to undo the huge loss of the previous month that sent home building to its lowest level in two years, according to Bloomberg. On Tuesday, the Commerce Department reported that housing starts increase by 7.2% in March to an annual rate of 549,000, which is above the 520,000-unit rate forecast by economists. The strong gain followed an originally reported 19% drop in housing starts during February, which brought the annual rate down to a revised 512,000 and marked the lowest level since April 2009.
The strong rebound failed to make up for the poor showing in February, and Richard DeKaser of Parthenon Group said, “We remain at very low levels,” summarizing, “The best description is bumping along the bottom.” The report detailed that building permits jumped 11% to an annual pace of 594,000, indicating that better prospects likely lie ahead. Dekaser continued to say, “The underlying trend is one of stability or modest improvement,” although Jeffrey Mezger of KB Home cautioned, “A sustained, broad-based housing recovery will not occur until we start to experience material job creation.”