US housing activity remained subdued in March, as the impact of seasonal weather continued to weigh on housing starts, while building permits declined more than forecast.
Housing starts in March rose to a seasonally adjusted 926,000, from an upwardly revised 908,000 in February, the Department of Commerce reported on Thursday. Analysts expected housing starts to surpass the 1 million mark last month.
Single-family housing starts increased 4.4% to a seasonally adjusted 618,000. Groundbreaking for buildings with five or more units was 287,000.
Groundbreaking plunged in February, as severe winter weather gripped much of the country.
Meanwhile, building permits declined faster than forecast in March after surging the month before. Authorizations fell to a seasonally adjusted 1.039 million, below the revised February rate of 1.102 million.
Single-family permits increased 2.1% to 636,000. Authorizations of buildings with five or more units was 378,000, official data showed.
The March data reflect a tepid housing recovery, as uneven demand continues to characterize the market. The housing recovery has been demonstrably weaker over the past year, as rising mortgage rates, rising house prices and weak earnings growth have reduced buyer interest. However, analysts are still confident that the recovery will regain traction now that mortgage rates are low again.
The National Association of Realtors (NAR) will report on existing home sales next week. The Department of Commerce will also report on new home sales in the latter half of next week.
In a separate report on Thursday the Department of Labor said initial jobless claims rose unexpectedly last week, although continuing claims fell to the lowest level since 2000.
The number of Americans seeking jobless benefits increased 12,000 to a seasonally adjusted 294,000 in the week ending April 11. A median estimate of economists called for a drop to 280,000 after claims were revised upward by 1,000 the previous week.
Continuing jobless claims declined unexpectedly, falling 40,000 to 2.27 million in the week ending April 4. That was the lowest rate since December 2000.
A stronger labour market bodes well for the housing recovery because it gives consumers more confidence to buy homes. The labour market recovery has been on a tear since early 2014 and is expected to improve further this year, despite disappointing March nonfarm payroll numbers. The unemployment rate could drop to as low as 5.2% in 2015, according to the Federal Reserve’s latest forecast.