The US housing sector experienced a decline of 7 percent in March after a positive stint in February. Warmer climate signalled better construction activity last month. However, March could not sustain the numbers. Still, the numbers of permits have risen in the month, pointing to a better position in the housing and construction sector. Figures for the first quarter are still good and experts are expecting further growth in this sector in 2017.
The US Housing Sector Breeds Positivity
The housing sector is going through a period of initial hiccups but recovery is on the way. The annual rate of 1.22 million, adjusted seasonally, refers to a 6.8 percent drop in housing. However, the Commerce Department data suggests that the figures are still higher than last year. The sector registered a 9.2 percent gain year over year. However, economists expected the numbers to be higher, at 1.24 million for the month of March.
This drop is offset by a rise in number of permit applications in March. 1.26 million Permits were applied for in the last month of the quarter, registering a 3.6 percent increase. The number of permit applications was 17 percent higher year-over-year. This shows that construction activity will increase in the months to come.
Homebuyers Demand More
A stronger growth in single-family homes could lead to a better housing market in 2017. Apartments are usually built for rental. Therefore, growth in single family homes is an accurate measure of a supportive economic environment. Note that the large numbers of these homes are being built since September 2008. Americans now want to buy more homes and the builders must pick up activity to ensure that the supply side issues don’t exist. Though the builder sentiment dipped slightly in March, it is expected to remain high in April. The current inventory of homes is insufficient for the demand which may make the builders pick pace in second quarter.
The labor market is tightening, leading to a steady rise in US housing demand. Though the economy slowed in the first quarter, there is room for growth. The manufacturing sector also experienced a small decline. The construction sector still must match up to its long run averages. A few national builders could release their earnings report in the next few days. Their guidelines for the next quarter could foretell the real story of this sector. For now, there are ample reasons to remain positive and bullish on housing and construction sector.