Housing Starts Skyrocket in March

By at 16 April, 2021, 11:29 am


The strong housing market had taken a breather in February. In fact, both housing starts permits took a dive in February after months of strong growth. Given severe weather that struck major parts of the country, the question was: Did the February decline merely reflect a temporary, weather-related phenomenon, or was something more at work?

The March data released from the U.S. Census Bureau points to February being all about the weather. March housing starts skyrocketed by 19.4 percent versus February, with single-family starts up by 15.3 percent. (See the following charts.)

Source: Federal Reserve Bank of St. Louis, FRED

Source: Federal Reserve Bank of St. Louis, FRED

Compared to the pre-pandemic level in January 2020, housing starts in March 2021 (seasonally adjust, annualized rate) were up by 7.5 percent, with single-family starts up by an incredible 25 percent.

Building permits – a signal of future housing starts – grew in March as well, with overall permits up by 2.7 percent versus February, and single-family permits up by 4.6 percent.

The residential housing market is one of the few industries that has completely recovered after severe pandemic declines in March and April of last year. That’s good news for the small businesses that overwhelmingly populate the housing industry (as SBE Council has noted previously, 99.7 percent of employer firms in the residential construction sector, for example, have fewer than 100 employees).

It also speaks to other developments, from a pandemic-related increase in demand for more living space, as well as a level of confidence about the economy and jobs looking ahead. After all, people tend not to buy houses if they think their employment and incomes are at risk.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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