New-home construction in the United States went up in March to its highest level in five years. It was attributed to the increase in the demand for multifamily buildings that support economic growth. Starts gained 7 percent to a 1.04 million annual rate, which is the most since June 2008, from a revised 968,000 rate in February. Other reports showed consumer prices went down in March and factory production slowed.
The high demand for rental units as well as the record-low mortgage rates will keep residential construction a vital part of the expansion. There are concerns that the mandated cuts in planned federal spending will slow down the nation’s economy. The lack of inflation means the Federal Reserve will keep its stimulus program.
Stocks increased during the day with the Standard & Poor’s 500 Index gaining after its biggest drop since November. Corporate earnings and construction data were above estimates made by analysts. The S&P 500 increased 1.4 percent, which is the most since January 2, to close at 1,574.57. Gold also rebounded from its largest drop in 33 years. Gold futures for June delivery increased 1.9 percent to close at $1,387.40 per ounce on the Comex.
The average estimate made by 80 economists in a Bloomberg survey for US housing starts went up to 939,000 yearly rate. Last month’s results were above the estimates that ranged from 885,000 to 985,000. February’s rate was initially reports to be 917,000.
Starts on multifamily homes increased 31 percent in March to an annual rate of 417,000, which is the most since January 2006. This was due to the improvement of the job market.