After surprisingly strong gains early in the year, new construction leveled off in March, declining almost 6 percent from last month to their lowest point since October 2011, the Census bureau reported Tuesday.
Major bummer, right?
Not necessarily. While news that fewer homes and apartments are being built might seem like a bucket of cold water tossed on a housing market just starting to heat up, we're probably not headed for a new housing slump, experts say.
A lot of it has to do with the volatility of construction starts, especially in the multi-family sector. Multi-family starts—such as apartment buildings—fell almost 17 percent, pretty much reversing gains recorded in January and February.
But there is a silver lining. If you looked past the headline news that new construction fell, you saw that building permits—a leading indicator of future construction—were up 4.5 percent in March and more than 30 percent versus a year ago, primarily on a jump in permits for apartment buildings.
"The outcome is the result of uncommonly warm and dry weather early in 2012 that advanced some construction to January and February as well as the normal monthly fluctuations especially in apartment construction," David Crowe, chief economist at the National Association of Home Builders, wrote in a post Tuesday.
"The March starts report demonstrates the variable nature of the current housing recovery," he added.
What's more, just taking a longer-term view, the March numbers don't look quite as bad. New construction is still more than 10 percent up over numbers recorded last March.
So while construction numbers might have dipped in March, the overall trend is clearly up toward recovery, experts say. It's just not likely to be a straight shot to the top.