US new home construction falls 5.8% in March

17 April 2012 15:11  [Source: ICIS news]

WASHINGTON (ICIS)--US new home construction fell sharply in March by 5.8% from February, the Commerce Department said on Tuesday, including a nearly 20% drop in multi-family apartment units, an area that had been showing some growth.

In its monthly report, the department said that housing starts in March were at a seasonally adjusted annual pace of 654,000 units, a 5.8% decline from the downwardly revised February figure of 694,000.

February’s housing starts were initially estimated at 698,000 and marked a 1.1% decline from January’s pace.

Within the overall data for new housing construction, work on new single-family homes was off only marginally in March, down 0.2% from February’s rate.  Although negative, the 0.2% March decline is seen as somewhat reassuring compared with the 9.9% plummet reported for one-family housing starts in the prior month.

Single-family home building is considered the core of the housing construction sector.

In addition to the decline in work on new single-family homes, construction activity in the apartment segment was off dramatically, falling by 19.8% in March from February, the department said.

Construction of new multi-family apartment buildings had been a relative bright spot in the housing industry over the last year, as bank foreclosures put an increasing number of former home-owners into the rental market.

The monthly number of apartment units built rose from a seasonally adjusted annual pace of 124,000 in April last year to 222,000 in February this year.

But multi-family residential construction is a smaller part of the housing industry, and increases there signalled continuing troubles in the single-family home sector as foreclosures continued to flood that market. 

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 $15,000 (€11,400) worth of chemicals and derivatives used in the structure or in production of component materials.

The department also reported a 4.5% gain in the number of residential building permits issued in March compared with February, increasing to a seasonally adjusted annual rate of 747,000 from the prior month figure of 715,000.

But here too data for the core single-family housing sector was disappointing, as the number of building permits issued last month for one-family homes fell by 3.5% from February.

The overall increase in building permits for March was attributed to a 24.2% gain in multi-family residential construction, which appears poised for a renewed upturn in April.

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.

The downturn in housing starts for March reflects the new decline in market confidence among US new home construction contractors.

US Housing Starts

 

Mar ’12

Feb ’12

Feb-Mar

Mar ’11

Mar ’11 to Mar ’12

US Housing Starts

654,000*

694,000*

-5.8%

593,000*

10.3%

* Seasonally adjusted & annualised

Paul Hodges studies key influences shaping the chemicals industry in Chemicals and the Economy

($1 = €0.76)


By: Joe Kamalick
+1 713 525 2653



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