The March decline, just like in February, was sharper than experts had predicted. Building permit applications also fell in March, totaling just over 510,000, the lowest on record. The most significant drop in new home construction took place in the apartment sector, dropping almost 30%; though that sector saw a massive 62% rise in February. The single family dwelling sector actually saw little change from February to March. The pace of construction for single family homes is about 50% lower than last year, though experts encourage that the stabilization is a good sign that the construction drop is nearing a bottom. Analysts, while predicting home sales and prices to hit bottom and begin to rise, caution that with continued foreclosures and rises in unemployment, it could be months before that happens.
The March construction drop came on the heels of a February construction increase of more than 17%, due mainly to the massive apartment gains. The areas that saw a drop in construction pace were the West (over 26%) and the South (almost 17%). The Midwest (almost 16%) and the Northeast (just over 6%) actually saw increases in construction activity.
Meanwhile, builder sentiment is on the rise. The National Association of Home Builders (NAHB), on Wednesday, released a report that detailed its gauge of builder sentiment. It represented the largest one-month increase in builder sentiment in the last five years. While still near record low levels, the index jumped to its highest point since October. These results are the national results and do not necessarily apply to the Marin real estate market.