WASHINGTON (MarketWatch) -- Fresh data on new construction of U.S. housing units showed an upward trend in place since the beginning of the year as an initial report of weakness in February was revised away.
Starts rose 1.6% in March to a seasonally adjusted 626,000 annualized units, the Commerce Department reported Friday. This was stronger than the 610,000 pace expected by economists surveyed by MarketWatch. See calendar of major indicators.
Treasury prices (UST10Y 3.83, -0.03, -0.70%) and the dollar added to gains after the report.
Even more surprising, February starts were revised higher to a 616,000 pace from 570,000 previously reported. This was up 1.1% from the prior month. The initial estimate was a 5.9% drop.
As a result of the revisions, starts have risen for three straight months and are now at the highest level since November 2008.
The government cautions that its monthly housing data are volatile and subject to large sampling and other statistical errors. In most months, the government can't be sure whether starts increased or decreased. In March for instance, the standard error for starts was plus or minus 15.2%. Large revisions are common, but rarely have been in such a positive direction during this recession.
In March, the strength came from multifamily starts. There was a slight decrease in starts of single-family homes.
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Starts of single-family homes fell 0.9% to a 531,000 rate in March.
Starts of multifamily units surged 39.7% to 88,000.
The strength was concentrated in the South. All other regions declined in March.
In the past year, starts are down 20.2%. Starts of single-family homes are up 47.1%, while starts of apartments and condos have plunged 31.8%.
Building permits rose 7.5% to a seasonally adjusted annual rate of 685,000 in March.
Building permits for single-family homes increased 5.6% to a 543,000 rate. This is the highest level since August 2008. Many economists consider single-family permits to be the most important number in the government's release.
Permits for apartments and condos rose 15.4% to 142,000.
On Thursday, the National Association of Home Builders said its members were more encouraged about their business in April.
The home builders' sentiment index rose to 19 in April from 15 in March.
"We may be seeing some modest improvement in the fundamentals for new housing construction," wrote the RDQ economic team in a note to clients.
A tax subsidy for buyers expires at the end of April and "we will need to see data for May and June before we can put too much weight on this conjecture," the RDQ note said.
It can take four months for a new trend in housing starts to emerge from the data. In the past four months, housing starts have averaged 606,000 annualized, up from 594,000 in the four months ending in February.
