2021.04.1613:35:00UTC+00U.S. Housing Starts Skyrocket To Highest Level Since June 2006

A report released by the Commerce Department on Friday showed a substantial rebound in new residential construction in the U.S. in the month of March.

The Commerce Department said housing starts skyrocketed by 19.4 percent to an annual rate of 1.739 million in March after plunging by 11.3 percent to a revised rate of 1.457 million in February.

Economists had expected housing starts to spike by 13.5 percent to a rate of 1.613 million from the 1.421 million originally reported for the previous month.

With the bigger than expected jump, housing starts reached their highest level since hitting an annual rate of 1.802 million in June of 2006.

The report showed substantial increases in both single-family housing starts and multi-family housing starts.

Single-family starts surged up by 15.3 percent to an annual rate of 1.238 million, while multi-family starts soared by 30.8 percent to a rate of 501,000.

Meanwhile, the report showed building permits jumped by 2.7 percent to an annual rate of 1.766 million in March after tumbling by 8.8 percent to a revised rate of 1.720 million in February.

Building permits, an indicator of future housing demand, had been expected to surge up by 4.0 percent to a rate of 1.750 million from the 1.682 million originally reported for the previous month.

The smaller than expected rebound in building permits came as a spike in single-family permits was partly offset by a decrease in multi-family permits.

Single-family permits shot up by 4.6 percent to a rate of 1.199 million, while multi-family permits fell by 1.2 percent to a rate of 567,000.

"We expect the pace of housing starts to moderate slightly over the balance of 2021 but still look for starts to increase more than 6% for the year," said Nancy Vanden Houten, Lead Economist at Capital Economics.

On Thursday, the National Association of Home Builders released a separate report showing a modest increase in U.S. homebuilder confidence in the month of April.

The report said the NAHB/Wells Fargo Housing Market Index inched up to 83 in April after dipping to 82 in March, matching economist estimates.

The NAHB noted the uptick in homebuilder confidence came even as builders continued to grapple with rising lumber prices and supply chain issues and consumers faced higher home prices due to a lack inventory.