WASHINGTON (Reuters) - U.S. single-family homebuilding plunged to an eight-month low in March and could decline further as tariffs on imported materials raise costs and offset declining mortgage rates.
Single-family housing starts, which account for the bulk of homebuilding, dropped 14.2% to a seasonally adjusted annual rate of 940,000 units last month, the lowest level since July, the Commerce Department’s Census Bureau said on Thursday.
President Donald Trump has slapped import duties on virtually all foreign goods and his trade policy has been rapidly shifting, raising fears of inflation re-igniting and dimming the economy’s outlook.
A National Association of Home Builders survey on Wednesday showed sentiment among single-family homebuilders remained depressed in April. The NAHB said the impact of import duties was already being felt with "the majority of builders reporting cost increases on building materials due to tariffs."
It said suppliers have on average raised their prices by 6.3%, meaning that builders estimated a typical cost effect from recent tariff actions at $10,900 per home. These increased costs have overshadowed a recent moderation in mortgage rates, driven by concerns over the economy’s outlook.
There is also little incentive for builders to continue breaking ground on housing projects, with new housing inventory at levels last seen in late 2007.
Permits for future construction of single-family housing fell 2.0% to a rate of 978,000 units in March.
Starts for housing projects with five units or more were unchanged at a rate of 371,000 units.
Overall housing starts tumbled 11.4% to a rate of 1.324 million units. Economists polled by Reuters had forecast housing starts falling to a rate of 1.420 million units.
Multi-family building permits jumped 10.1% to a rate of 445,000 units. That lifted overall building permits by 1.6% to a pace of 1.482 million units last month.