New-home construction drops more than expected in March MABA MassachusettsRealEstate FirstTimeHomeBuyers MaBuyerAgent

 Housing starts plunged in March, coming in well below an already low consensus estimate. Overall new-home construction, which includes single-family and multifamily units, fell eleven point four percent from February’s downwardly revised measurement to a seasonally adjusted annual rate of one million three hundred and twenty four thousand units, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development said. Year over year, the rate was up one point nine percent.

The consensus estimate was for an annual rate of one million four hundred and ten thousand units. The sharp pullback from February comes as builder sentiment remains in negative territory on tariff worries, as well as continuing supply-side and affordability challenges arising from higher material costs and skilled-labor shortages, First American Deputy Chief Economist Odeta Kushi said. “Residential building material costs are still more than forty percent higher than pre-pandemic levels, making construction more expensive,” Kushi said in a statement. “Recent tariff actions could push costs even higher, with builders estimating an additional ten thousand nine hundred dollars per home. 

 If these tariffs persist, builders will have no choice but to pass on the costs to consumers, who are already struggling with housing affordability.” By type, single-family homes were started at a rate of nine hundred and forty thousand per year, which is a fourteen point two percent monthly drop from February’s rate of one million and ninety six thousand units and a nine point seven percent slide from the year-ago rate of one million and forty one thousand homes. 

 The pace of multifamily residential starts was flat compared to February, at three hundred and seventy one thousand per year, which represents a forty seven point eight percent surge from the year-ago annual rate of two hundred and fifty one thousand units. Builder optimism about single-family sales for the next six months dropped to its lowest level since November 2023, Kushi noted. “[T]he worsening outlook for future sales conditions reflects growing builder concerns about costs and affordability,” she said.

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