Drop in March Housing Starts/Permits Likely an Aberration

The drop in March Housing Starts/Permits cannot be attributed to just the volatile Multi-Family component, as 1-Family Starts/Permits fell, as well.   Nevertheless, the drop looks to be an aberration, and the risk is for a rebound in Starts in April:

1.  The 7.7% m/m decline in Permits (both Total and 1-Family) was not as large as the 8.8% decline in Starts.  This relatively better performance of Permits points suggests the drop in Starts was overdone relative to plans, possibly due to bad weather.  (1-Family Permits rose in the Midwest and West.)  The spread between Permits and Starts points to a rebound in Starts in April.

2.  The drop in Starts and Permits could have been payback for the boost they got in January and February from the relatively warm weather.  If so, the March levels understate the underlying trend.

3.  Evidence that residential construction activity was in an uptrend in March is in the March Employment Report.  Construction jobs continued to climb that month, both for residential and non-residential activity.