Washington, DC, Apr. 16--Home-building activity rebounded in March, following two straight months of decline, fueled by low interest rates.
Housing starts jumped 6.4% to a seasonally adjusted 2.007 million annual rate last month, the Commerce Department reported Friday.
The increase was the largest since last May, and followed two straight months in which bad weather in some parts of the country put a damper on housing construction. In February, starts dropped a revised 2.6% to an annual rate of 1.887 million.
The March gain soared past economists' expectations for a rise of 1.9% to a 1.900 million annual rate, according to a survey by Dow Jones Newswires and CNBC.
The housing sector of the U.S. economy has remained strong for the past several years, defying economists' expectations as it weathered the 2001 economic recession. Near record-low mortgage rates have propelled the housing market to new heights in recent months, underpinning the economic recovery.
Building permits, an indicator of future building activity, rose 1.9% last month to a 1.946 million annual rate.
But housing starts "cannot be sustained at this level," wrote Ian Shepherdson, chief U.S. economist at High Frequency economics, in a note to clients. And, "with a serious rise in interest rates now finally underway, [starts] will likely decline markedly by the end of the summer."
Construction on single-family homes rose 5.5% while ground broken on new apartment buildings jumped 11.2%.
Housing starts rose in all regions except for the Northeast where they fell 4.9%. Starts jumped 10.6% in the Midwest, 8.5% in the South, and 3.7% in the West.
Overall starts surged 15.2% from March 2003. An estimated 174,000 houses were actually started last month, and 180,200 building permits were issued, both based on seasonally unadjusted figures.
