U.S. housing starts fell 0.8% in March from the previous month after a ﷽gain of 7.3% in February, as multifamily consꦿtruction dropped, hindered by cutbacks in lending to commercial developers.

Single-family starts rose 2.7% from February, while 🐼multifamily declined by 5.9%.

“We expect choppiness for single-family construction in the months ahead, with the 2023 data posting significant year-over-year weakness before improving on a sustained basis,” said National Association of Home Builders Chief Economist Robert Dietz. “T🌄he multifamily market softened in March, and we anticipate ongoing declines for apartment construction in the months ahead due to tighter lending conditions in the commercial real estate sector.”

Housing starts totaled 1.42 million units, according to data from the U.S. Department of Housing and the U.S. Census Bureau. Single-family starts rose to 816,000, down 27.7% from March 2022. Multifamil𝓀y starts totaled  559,000, down 5.7% from a year ear♌lier.

Homebuilder sentiment is growing alongside incꦬreased single-family housing starts, according to the NAHB. 

“With builder sentiment climbing for four consecutive months and single-family starts continuing to move gradually higher from low levels since the beginning of the year, this indicates that a turning point for single-family construction will occur later this year after declines in 2022,” said Alicia Huey, NAHB's chair.

The pickup, especially for single-family construction, may help close the gap for families searching for h𒆙omes. Ma🍰rket inventory for existing homes is historically low, with homeowners hesitไating to sell amid higher mortgage rates than they are currently paying.

Between 2012 and 2022 the U.S. was in need of about 6.5 million single-family homes, a recent analysis from Realtor.com found. The rate of household formation is rapidly ou👍tpacing the number of new-build single-family homes on the market, making it difficult for wo💃uld-be homebuyers looking to purchase.

Still, combꦜined single-family and multifamily starts were down year-over-year in every r🦹egion in the U.S. 

They were 8.3% lower in the Northeast, 34.5% lower in the Midwest, ♔11.5% lower in the South and 28.2% lower in the West. 

P♊ermits decrease as singl🍌e-family construction lags

Building permits dropped by 8.8% through March, to a 1.41 million annualize𓆉d rate. 

Single-family permits increased 4.1% from February and fell 29.7% from March 2022. Multifamily permits fell alongside 🍸multifamily starts, decreasing by 22.1%. 

Year-over-year, permits were 24.5% lower in the Northeast, 25.3% lower in the Midwest, 15.7% lower in the So𓃲uth and 28.1% lower in the West. 

March brought the 10th mon𝐆thly decline in the number of single-family homes under construction, dropping toꦆ 716,000. Builders finished 15,000 more homes than they started throughout March.