US Housing Market Faces March Decline

James Hyerczyk
Updated: Apr 16, 2024, 14:41 GMT+00:00

Key Points:

  • Housing Starts and Building Permits plummet, defying growth expectations.
  • Single-family housing starts and permits witness notable decreases.
  • Market sentiments may turn cautious amid ongoing housing market instability.
Building Permits, Housing Starts

The US housing sector experienced a notable decline in March, with both Housing Starts and Building Permits falling more than anticipated. This downturn follows a period of growth, indicating a volatile phase for the housing market, which could have implications for the broader economy and the financial markets.

Sharp Decline in Housing Starts

March saw a significant 14.7% decrease in Housing Starts, dropping to 1.32 million units. This sharp decline reverses the 12.7% gain seen in February, showcasing a potential instability in housing construction momentum. Notably, single-family housing starts, a key market segment, decreased by 12.4% to 1.022 million units.

Building Permits Also Fall

Building Permits, an indicator of future construction activity, decreased by 4.3% to 1.458 million units in March. This reduction came after a modest rise in January, reflecting a decrease in building intentions, particularly in single-family homes, which saw a 5.7% drop in permits to 973 thousand.

Comparison with Expectations and Historical Data

Both Housing Starts and Building Permits fell below market expectations, with starts dropping significantly from the anticipated 1.480 million units. Building Permits also recorded a downturn from the expected 1.510 million, underscoring a slowdown in future construction plans. Additionally, privately owned housing completions decreased by 13.5% from February and were 3.9% lower than the same month last year, with single-family completions down by 10.5%.

Economic and Dollar Index Reaction

Despite the disappointing housing data, the US Dollar Index remained resilient, holding above the 106.00 mark. This indicates that while the housing sector shows signs of weakening, it has not yet had a profound impact on broader financial markets.

Market Forecast

The decline in both Housing Starts and Building Permits suggests a bearish outlook for the US housing market in the short term. The consistent decrease across various segments indicates potential cautiousness among builders due to economic uncertainties or market saturation. Investors and market watchers should brace for a possible further slowdown in housing activities, which could dampen economic growth prospects and influence market sentiment negatively.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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