New residential construction in the U.S. showed a substantial decrease in the month of March, according to a report released by the Commerce Department on Thursday.
The report said housing starts plunged by 22.3 percent to an annual rate of 1.216 million in March after falling by 3.4 percent to a revised rate of 1.564 million in February.
Economists had expected housing starts to tumble by 18.7 percent to a rate of 1.300 million from the 1.599 million originally reported for the previous month.
The bigger than expected decrease in housing starts reflected steep drops in both single-family and multi-family starts.
Single-family starts dove by 17.5 percent to a rate of 856,000 in March, while multi-family starts plummeted by 31.7 percent to a rate of 360,000.
“Starts declined in all regions, but the fall in the Northeast, the region with the largest concentration of COVID-19 infections, was by far the steepest,” said a note from economists at Oxford Economics.
The economists added, “Housing starts are expected to fall further in the second quarter and recover only modestly in the second half of 2020, leading to a negative performance for the year overall.”
The Commerce Department said building permits also tumbled by 6.8 percent to an annual rate of 1.353 million in March after slumping by 6.3 percent to a revised February rate of 1.452 million.
Building permits, an indicator of future housing demand, had been expected to sink by 11.2 percent to a rate of 1.300 million from the 1.464 million originally reported for February.
While single-family permits plunged by 12.0 percent to a rate of 884,000 in March, multi-family permits jumped by 4.9 percent to a rate of 469,000.
On Wednesday, the National Association of Home Builders released a separate report showing a record monthly decline in homebuilder confidence in the month of April.
The report said the NAHB/Wells Fargo Housing Market Index plummeted to 30 in April after slipping to 72 in March. Economists had expected the index to tumble to 55.
The steep drop reflected the largest single monthly change in the history of the index and marks the lowest builder confidence reading since June 2012.
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