Helping an already weak U.S. housing market home construction rose 7.2 percent in March from February to a seasonally adjusted 549,000 units. The Commerce Department also reported today that building permits rose 11.2 percent after hitting a five-decade low this past February. Building permits are an indicator of future construction.
Despite the increase, the building pace is far below the 1.2 million units a year that many economists consider healthy and the number of homes now under construction has fallen to a forty year low.
Chief economic strategist at Miller Tabak + Co, Dan Greenhaus said, "Housing starts remain at an extraordinarily depressed level. To put this in further perspective, a doubling of (new homes) from here would still put starts at the lowest level of any other recession."
In the early 1980s and 1990s, during those housing recessions, new home construction then fell to more than 1 million homes per year and to date this year's pace, which is 509,000 units, is slightly more than half those levels.
Making up roughly 80 percent of home construction, single-family homes rose 7.7 percent in March. Also, building permits increased to their highest level since last December.
The increase in building permits could be a signal of a turnaround in the coming months. On average a new homes takes six months to build and the number of new permits is higher than the number of homes that have already started construction.
The increase in home construction activity was felt in most regions of the country with the West showing a 27.6 percent increase.