US housing stats rose 7.0% month over month (m/m) to 1.036mn units, exceeding consensus expectations. The report also contained upward revisions to February data as starts are now reported as having risen 7.3% m/m to 968k (initial: +0.8%m/m to 917k). The outperformance relative to consensus estimate came from multi-family starts, which rose 31.1% m/m to 417k, the strongest pace of multi-family starts since early 2006. Single family starts at 619k is down 4.8% from the revised February data, which showed single family starts at 650k. On a regional basis, starts were higher in the Midwest (+9.6% to 149k), South (+10.9% to 560k), and the West (+2.7% to 229k), while the Northeast was the only region to post a decline (-5.8% to 98k). Housing permits were softer in March, falling 3.9% m/m to 902k, with single family permits falling 0.5% m/m to 595k and multi-family starts falling 10.0% m/m to 307k.
The Q1 average of housing starts is now 969k, up from the 904k posted in Q4 and in line with consensus forecast. Our expectation was that the dramatic clearing of inventories of new and existing homes that has taken place in previous years would mean homebuilders have to increase start activity just to keep inventories near historic lows. In addition, the processing of foreclosed and delinquent properties is transitioning many households away from homeownership and into renters, which accounts for the relative strength of multi-family starts over single family starts. We also expect lean inventories to support home prices and look for home prices nationally to appreciate by 6-7% this year. March start activity and the revisions to previous data leave our tracking estimate for Q1 real GDP growth at 3.0% with residential investment contributing a healthy 0.6pp to growth. Our expectation is that residential investment will continue to add to GDP growth in the coming quarters and that housing should prove resilient to any slowing in growth from restrictive fiscal policies.