Housing starts fell 17% to their lowest level since January 2014. The decline was across the board in building types and regions. Single-family starts were down 14.9% and multifamily starts were down 20.8%. Single-family starts were down the most in the weather sensitive Northeast (-60.7%) and Midwest (-32.4%) but were also down in the less unseasonable weather patterns of the South (-5.9%) and West (-9.1%).

While total building permits were up 3%, single-family permits were down 6.2% with only the West recording a rise in single-family permits (+5.6%). Multifamily permits were up 18.3% to the highest level since April 2014 and only the third time above 470 since 2006.

Aside from a small weather impact in the Northeast and Midwest, the decline is in line with a hesitation in builder sentiment as measured by the NAHB/Wells Fargo March Housing Market Index that fell 2 points to 53. Builders express concern that buyers are unable to attain a mortgage because of tight underwriting standards and that buyers continue to expect price concessions and discounts.

Coincident with buyers discount expectations, builders are facing higher costs and reduced availability of lots on which to build the homes and workers to construct them. The squeeze is causing builders to slow construction until new home prices rise, consumers regain confidence and the supply chain for lots, labor and, to a lesser extent, building materials rebuilds.

The underlying conditions for a good, not great, housing rebound remain in place. The economy is adding jobs at a much faster pace than earlier in the recovery, overall growth is more dependably positive, mortgage rates are historically low and there is considerable pent-up demand waiting to be released. Consumers need to regain their confidence in those trends and to readjust their expectations for home prices. The softness in the fourth quarter GDP estimates and the very slow rise in worker pay and household incomes contributed to the current hesitation.