Permits Up, Construction Down

Building permits in March were more than 30 percent higher year-over-year, according to a new government report.

Building permits reached a three-year high but construction slowed in March, according to a government report released this week, signaling a still-uneven recovery for the housing market.

Permits for housing units, a gauge for future building, were up 4.5 percent over February?EUR??,,????'???s revised rate to a seasonally adjusted annual level of 747,000 in March. The rate is over 30 percent higher than March 2011, and represents the most authorizations since September 2008.

Meanwhile, construction was down 5.8 percent last month to a seasonally adjusted annual total of 654,000 homes, the lowest since October, primarily due to a 16.9 percent drop in apartment construction.

Single-family homebuilding starts remained static, giving up 0.2 percent from the month before, and single-family permits fell 3.5 percent from February, from 479,000 to 462,000 units. The U.S. Census Bureau and the Department of Housing and Urban Development released the report Tuesday.

"While combined U.S. housing starts lost some ground in March, this was almost entirely due to typical month-to-month volatility on the multifamily side," said David Crowe, chief economist for the National Association of Home Builders.

"The fact is that single-family and multifamily starts and permits were all stronger in the first quarter of 2012 than they were in the fourth quarter of 2011, indicating that the market continues to slowly strengthen, albeit in fits and starts," Crowe said.

While home builder confidence has trended up since last fall, the NAHB?EUR??,,????'???s composite index on builder?EUR??,,????'???s market perceptions fell from 28 to 25 in April, which matched both January?EUR??,,????'???s index and the survey?EUR??,,????'???s pre-recession peak in 2007. Numbers below 50 indicate more builders believe conditions are bad than good.

Signs continue to point to a better 2012 than 2011 ?EUR??,,????'??? when new home sales were the worst in nearly 50 years ?EUR??,,????'??? but market conditions are far from ideal. Builders are competing with discounted foreclosures and short sales, and previously occupied homes are currently a better deal than new homes. Median prices for new homes are about 30 percent higher than re-sale prices, and rigid lending standards and high down payment requirements are real obstacles to a lively recovery.

Housing has only accounted for four percent of economic growth since the recession officially ended in June 2009. Previous recoveries saw 15 percent growth after a recession.