March Housing Starts: TKTK

• March housing starts were down 22.3% from February — the largest monthly pullback in starts since March 1984 — but were up 1.4% from a year ago, according to the U.S. Census Bureau.
• Housing permits were down 6.8% from February but up 5% year-over-year. The bulk of the monthly pullback in permits was in the single-family market — multifamily permiting activity was up from February, but down from a year ago.
• Housing completions in March were down 6.1% from February and 9% from March 2019.

The first read on home construction activity since the U.S. coronavirus outbreak began in earnest represents a disappointing reversal from prior months, which is not unexpected. But even so, the data itself is a bit surprising. Despite the big monthly drops, the year-over-year increases point to just how far the construction market had come in the year leading up to the outbreak of the crisis — and could signal an even larger drop to come in April. Builder confidence was soaring in the months leading up to the crisis, and the market looked poised for a banner year in 2020. Now, even with many construction projects labeled as essential work, evidence of quickly growing pessimism among builders has begun to mount in recent weeks. Unprecedented economic uncertainty and mandatory distancing guidelines squashed homebuyer demand and builders' ability to confidently invest in new housing projects. But while March’s decline did have some small silver linings, April will likely be a lot worse – it took until mid-March or even later for many states to tighten restrictions, and there's a real possibility that many builders fast-tracked what they could in those early weeks before bowing to reality. It's clear that builders are, for the time being at least, battening down the hatches in an attempt to weather the initial phase of this storm as best they can. But what they do in the coming months remains a mystery. Building permits had been trending up in recent months, reaching a near 13-year high in January, so the pieces are in place for builders to take planned projects off the shelf once they feel confident enough to proceed. But with so much uncertainty across the economy, and the outlook not yet getting any clearer, it's unlikely that builder activity will revert to anything close to "normal" levels any time soon.

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