Highlights
In March, housing starts reversed course, posting a sharp decline. Starts fell back 10.8 percent in March, following a 17.2 percent rebound the month before. The March pace of 0.510 million units annualized was down 48.4 percent year-on-year. The latest starts number was significantly below the consensus forecast for 0.570 million units. The reversal in starts was led by the multifamily component which plunged 29.0 percent while single-family starts were unchanged.

By region, the fall in starts was led by a monthly 26.3 percent drop in the Northeast along with a 16.8 percent decline in the South. Starts rose in the Midwest and Northwest, posting gains of 15.9 percent and 6.3 percent, respectively.

Permits also resumed a downtrend, declining 9.0 percent in March, after a rebound of 6.2 percent in February. The March permit pace of 0.513 million units annualized was down 45.0 percent on a year-ago basis.

The latest housing starts report shows that this sector remains under pressure from excess supply of unsold homes. This is another number that will help make first quarter GDP quite negative. However, March starts probably have worked beyond large seasonal swings in the prior two months related to unseasonable weather (cold and wet in January in the South and very mild in February). While there has been positive news in housing recently in terms of buyer traffic and refinancing, it probably is too early to expect a rebound in starts. For homebuilders, the negative news of a spike in foreclosure rates will outweigh the recent positives.

The fall in March starts should be a negative for equities and help soften interest rates.

Market Consensus Before Announcement
Housing starts in February made a significant comeback but it likely was mostly a technical rebound after January's very low number. Starts jumped 22.2 percent, following a 14.5 percent drop in January. The improvement in starts was led by the multifamily component which made an 82.3 percent monthly surge while the single-family component edged up 1.1 percent. It strongly appears that worse-than-average weather in January in the South contributed to the decline in January and better-than-average weather boosted starts in February. Although there are signs of improved home sales, there is not yet reason to expect any real pick up on construction as supply remains quite elevated-- 9.7 months for existing homes and 12.2 months for new homes on the market.

2009 Release Schedule

Released On: 1/22 2/18 3/17 4/16 5/19 6/16 7/17 8/18 9/17 10/20 11/18 12/16 Released For: Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov