With ongoing economic challenges, the pace of residential construction was a mixed bag in March. According to real estate marketing platform Realtor.com, permits for new housing units rose month-over-month by 1.6%, but housing starts and completions also fell by 11.4% and 2.1%, respectively.
Over the next several months, the South is expected to see the most new construction. Permits in the South grew by 3% month-over-month and 4.5% on a year-over-year basis for all housing types. For single-family homes, however, permits are picking up the quickest in the Northeast. In March, permits for single-family homes in the Northeast grew by 12.9% month-over-month and 25% year-over-year.
This month’s data, the last before the tariff announcements of early April, will serve as an important benchmark for how builders respond to the effects of the trade war. As has been the case for over a year, the number of units completed exceeds the number permitted or started.
Builders know that the US is short nearly 4 million homes, so there is pent-up demand for units that can be delivered today at today’s price point. Builders also know that tariffs, especially ones levied against construction inputs like lumber, gypsum, and steel, will hurt their bottom line and lead to less enthusiastic prospective buyers. We anticipate depressed construction activity in the months to come, especially as measured by permits and starts, as a result of these tariffs. Read more
