More signs that the economy was weaker than expected in the first quarter: U.S. housing starts fell more than forecast in March and permits for future home construction hit a one-year low.
Privately-owned housing starts in the United States last month were at a seasonally adjusted annual rate of 1.089 million, 8.8% below the revised February estimate of 1.194 million but 14.2% above the March 2015 rate of 954,000, the Commerce Department said on Tuesday.
Economists polled by Reuters had forecast housing starts slipping to a 1.17 million-unit pace last month, according to Reuters.
Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1.086 million, 7.7% below the revised February rate of 1.177 million, but 4.6% above the March 2015 estimate of 1.038 million.
The report adds to the narrative about a fragile economy, which, along with “tepid inflation,” validates the Federal Reserve’s decision to keep interest rates unchanged at its meeting last month, according to Reuters.
The Fed’s policy-setting committee meets on April 26 and 27. Market-based measures of expectations for Fed policy have priced out an interest rate hike in the first half of the year, according to CME Group’s FedWatch.
The Fed lifted its benchmark overnight interest rate in December for the first time in nearly a decade and policymakers recently forecast only two more rate hikes this year.
Single-family housing starts in March were at a rate of 764,000, 9.2% below the revised February figure of 841,000, the Commerce Department said. Groundbreaking on multi-family housing projects declined 7.9% to a 325,000-unit pace. Starts for buildings with five units or more fell to their lowest level in a year.