WASHINGTON – Housing construction rebounded with gusto in March, rising by 6.4 percent, the largest increase in 10 months.Commerce Department search
The advance in housing construction, the largest since last May, came after two straight months in which housing construction dropped. Those previous declines were blamed on bad weather in some parts of the country, which forced construction delays.
March's performance was stronger than analysts were expecting. They were forecasting housing starts to rise to a rate of around 1.9 million units.
Recent economic reports showing an increase in job creation, retail sales and consumer prices have all fueled speculation in financial markets that the Federal Reserve (search) will raise short-term interest rates in coming months.
That has caused long-term mortgage rates (search) to climb. Rates on 30-year mortgages rose to 5.89 percent this week, the highest since early December. Still, economists believe that home sales — which hit all-time highs last year — will remain healthy this year.
While economists have differing opinions on when the Fed may start to boost short-term rates, they do agree that it won't be at the central bank's next meeting May 4. Economists widely expect Fed policy-makers to hold short-term rates at a 45-year low of 1 percent at that time.
By region, new residential projects under way in March rose by 10.6 percent in the Midwest to a seasonally adjusted annual rate of 386,000. In the South, housing construction increased by 8.5 percent to a rate of 945,000 units, and in the West, housing starts rose by 3.7 percent to a pace of 502,000. But in the Northeast, new housing projects dipped by 4.9 percent to a rate of 174,000.
Permits filed to build new housing projects — a good measure of current demand — rose by 1.9 percent in March from the previous month to a rate of 1.9 million units. The rise in permits came after two straight months of declines.