Spring is typically a great time for real estate and home builders. However, in March, home construction activity declined and the overall report was disappointing. Building permits in March declined to 1,086,000 units, 7.7% lower than the revised 1,117,000 units in February, hitting a one-year low. Housing starts were also down 8.8% in March, coming in at 1,089,000 units compared to the February’s revised number of 1,194,000. Economist were expecting a decline to 1,118,000.
Homebuilder sentiment has remained the same for the past three months as builders complain of a lack of skilled labor impeding construction production. However, analyst do not necessarily agree as the low wage inflation isn’t indicative of a shortage in labor. Payroll growth in construction jobs has been the strong, and if there was a shortage, wages would be driven higher and we wouldn’t be seeing such an increase in jobs.
Land scarcity, a shortage in buildable lots, and delays in permit issuance may be the bigger cause for the declines. These factors impacted single family starts, which fell to its lowest level since October. And multi-family permits declined significantly.
The markets are struggling to hold on to earlier gains. Oil and gold are both up as the dollar is lower against the major currencies.