Housing starts plunged in March, coming in well below an already low consensus estimate. 

Overall new-home construction, which includes single-family and multifamily units, fell 11.4% from February’s downwardly revised measurement to a seasonally adjusted annual rate of 1,324,000 units, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development said. Year over year, the rate was up 1.9%. 

The consensus estimate was for an annual rate of 1,410,000 units.  

The sharp pullback from February comes as builder sentiment remains in negative territory on tariff worries, as well as continuing supply-side and affordability challenges arising from higher material costs and skilled-labor shortages, First American Deputy Chief Economist Odeta Kushi said.  

“Residential building material costs are still more than 40% higher than pre-pandemic levels, making construction more expensive,” Kushi said in a statement. “Recent tariff actions could push costs even higher, with builders estimating an additional $10,900 per home. If these tariffs persist, builders will have no choice but to pass on the costs to consumers, who are already struggling with housing affordability.” 

By type, single-family homes were started at a rate of 940,000 per year, which is a 14.2% monthly drop from February’s rate of 1,096,000 units and a 9.7% slide from the year-ago rate of 1,041,000 homes. The pace of multifamily residential starts was flat compared to February, at 371,000 per year, which represents a 47.8% surge from the year-ago annual rate of 251,000 units.      

Builder optimism about single-family sales for the next six months dropped to its lowest level since November 2023, Kushi noted. 

“[T]he worsening outlook for future sales conditions reflects growing builder concerns about costs and affordability,” she said.