U.S. housing starts, industrial production rise in March
(Adds industrial production data, analyst comments, markets)
* Housing starts increase 1.9 percent in March
* Building permits rise 2.5 percent
* Single-family starts fall 3.7 percent
* Industrial production gains 0.5 percent
By Lucia Mutikani
WASHINGTON, April 17 (Reuters) - U.S. homebuilding rose more
than expected in March amid a rebound in the construction of
multi-family housing units, but weakness in the single-family
segment suggested an acute shortage of homes for sale will
Other data on Tuesday showed a solid increase in industrial
production last month as cold weather boosted utilities output
and production at mines surged. The reports underscored the
economy's underlying strength even though growth in the first
quarter is expected to have slowed after three straight quarters
of brisk expansion.
"This continues the theme that the output and labor data
paint a stronger picture of the economy than we expect
first-quarter real GDP to do in part because of a seasonal bias
we believe exists in the GDP data," said John Ryding, chief
economist at RDQ Economics in New York.
Housing starts rose 1.9 percent to a seasonally adjusted
annual rate of 1.319 million units, the Commerce Department
said. Data for February was revised up to show groundbreaking
declining to a 1.295 million-unit pace instead of the previously
reported 1.236 million units.
Economists polled by Reuters had forecast housing starts
rising to a pace of 1.262 million units last month. Permits for
future home building rose 2.5 percent to a rate of 1.354 million
units in March.
U.S. financial markets were little moved by the data. Stocks
on Wall Street were trading higher as strong earnings from
Netflix, Goldman Sachs and healthcare companies
bolstered optimism over what is expected to be the strongest
earnings season in seven years.
The dollar rose against a basket of currencies, while U.S.
Treasury prices fell slightly.
Single-family homebuilding, which accounts for the largest
share of the housing market, fell 3.7 percent to a rate of
867,000 units in March. Permits for single-family home
construction dropped 5.5 percent to an 840,000 unit-pace, the
lowest level since September 2017.
A survey on Monday showed confidence among homebuilders fell
in April for a fourth straight month. Builders complained about
a lack of buildable lots and increasing construction material
costs. According to the survey, tariffs imposed by the Trump
administration on Canadian lumber and other imported products
were "pushing up prices and hurting housing affordability."
Homebuilding will probably not increase significantly to
eradicate an acute shortage of houses on the market, which is
pushing up prices and sidelining some first-time home buyers.
Demand for housing is being driven by a robust labor market,
which is underpinning the economy. Single-family home
construction fell in the Northeast, South and West, but rose in
Starts for the volatile multi-family housing segment surged
14.4 percent to a rate of 452,000 units in March. Permits for
the construction of multi-family homes jumped 19 percent to a
The outlook for housing inventory was mixed. Housing
completions fell 5.1 percent to 1.217 million units last month,
with single-family units dropping 4.7 percent. But the stock of
housing under construction rose 0.3 percent to 1.125 million,
the highest level since July 2007.
Single-family units under construction climbed 0.2 percent
to the highest level since June 2008.
"Construction remains below levels needed to return the
market to a normal supply/demand equilibrium, so we can expect
affordability and availability problems to continue into the
foreseeable future," said Robert Frick, corporate economist at
Navy Federal Credit Union in Vienna, Virginia.
In a separate report on Tuesday, the Federal Reserve said
industrial production rose 0.5 percent in March after jumping
1.0 percent in February.
It was boosted by a 3.0 percent surge in utilities
production and a 1.0 percent increase in output at mines.
Manufacturing production, however, rose only 0.1 percent after
soaring 1.5 percent in February.
"The fact that the manufacturing sector was able to notch a
gain on top of February's substantial increase suggests that,
overall, the manufacturing sector remains in good shape," said
Tim Quinlan, a senior economist at Wells Fargo Securities in
Charlotte, North Carolina.
Economists, however, worry that a brewing trade war between
the United States and China could cause disruptions to the
supply chain and undermine manufacturing.
(Reporting By Lucia Mutikani, Additional reporting by Jason
Lange; Editing by Andrea Ricci)
First Published: 2018-04-17 15:00:00
Updated 2018-04-17 18:08:59
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