US home construction gains in March but well below year-ago levels

19 April 2011 15:11  [Source: ICIS news]

WASHINGTON (ICIS)--US housing construction rose by 7.2% in March compared with February, the Commerce Department said on Tuesday, but the pace of new building in the key single-family home sector is still more than 20% below year-ago levels.

In its monthly report, the department said that the number of housing starts in the US last month was at a seasonally adjusted annual rate of 549,000 units compared with the upwardly revised February pace of 512,000 units.

Those figures include new multi-family apartment buildings, condominiums and single-family home construction. The one-family homes sector is regarded as the core segment of the nation’s housing industry.

While the pace of new home construction has picked up since February - which had seen a heart-stopping 22.5% decline compared with January - activity in the housing construction sector remains well below what it was a year ago.

The number of housing starts in March was put at 13.4% below the March 2010 rate of 634,000 units.  However, a federal tax credit policy benefiting home buyers was still in force during the first quarter of 2010, driving home construction to a level higher than it otherwise might have been in March last year.

The department’s housing data also shows that the key single-family home construction sector has experienced more of a downturn in the last year than apartment construction has.

While the pace of multi-family apartment building construction has grown by 28.6% compared with March 2010, one-family housing starts were down by 21% compared with the year-earlier month.

Apartment building construction was seen as benefiting from the sharp downturn in the housing market since 2006, because the demand for apartments increases as more and more homeowners lose their properties to foreclosure and are forced back into the rental market.

The department also said that the number of building permits issued in March grew by 11.2% compared with February to a seasonally adjusted annual pace of 594,000.

Building permits are issued by local governments when contractors are ready to break ground and begin construction of a residential structure, so monthly permitting data are seen as a real-time indicator of the housing sector’s near-term prospects.

But within the building permits data, figures show more growth for apartment construction, up by 28.1% compared with February, than in the single-family homes category, which saw a 5.7% increase in permits issued in March.

Reflecting the disparity shown between apartment building and one-family housing starts, the permit data show that the number of multi-family units authorised in March was up by 43% from the year earlier month, while single-family permits were down by more than 25% from March 2010.

The housing market is a key downstream consumer sector for the chemicals industry, driving demand for a wide variety of chemicals, resins and derivative products such as plastic pipe, insulation, paints and coatings, adhesives, roofing materials and synthetic fibres, among many others.

 The American Chemistry Council (ACC) estimates that each new home built represents some $16,000 (€11,200) worth of chemicals and derivatives used in the structure or in production of component materials.

US Housing Starts


Mar ’11

Feb ’11

Feb-Mar

Mar ’10

Mar ’10 to Mar ’11

US Housing Starts

549,000*

512,000*

7.2%

634,000*

-13.4%

* Seasonally adjusted & annualised

 ($1 = €0.70)

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy


By: Joe Kamalick
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