March Housing Starts: Sluggish Start to Spring Home Building

• Housing starts dropped to 1.42 million in March, down 0.8% from revised February 2023 figures and down 17.2% from March 2022, according to the U.S. Census Bureau. 
• Housing permits issued in March were down 8.8% from February and down 24.8% from a year ago, to 1.41 million (SAAR). 
• 1.54 million (SAAR) homes were completed in March, down 0.6% from February but up 12.9% year-over-year.

What happened: Housing starts and permits both fell in March from both a month ago and a year ago. 

What it means: March typically shows a rebounding of housing starts and permits from the winter blues, or at least it did in pre-pandemic trends. But with affordability pressures mounting, home builder activity is once again retreating this spring. 

What Zillow Senior Economist Nicole Bachaud thinks: While the start of spring typically brings new life to the housing market, the new home construction market has yet to see new growth. Builder confidence overall has been rising every month in 2023, but confidence that prospective buyers will return is still low, possibly a cause of lower home construction activity. But with home prices beginning to spring up once again, it’s clear that buyers are still jumping in where interest rates and creative financing will allow for affordable opportunities. While new projects might be getting a slow start, housing completions, especially single-family homes, are up as new inventory is continuously moving through the construction pipeline. This refresh to housing inventory is great for buyers who are facing the spring shopping season, giving more opportunities in a time where inventory is still tight. As prices continue their seasonal rebound, builders should respond with increased construction activity throughout the rest of the spring.