Housing starts in the U.S. dropped in March, nearing a 17-year low and signaling that declining construction will continue to erode economic growth this year, economists said before a report today.
Residential starts fell 5.2 percent to an annual rate of 1.01 million homes, according to the median forecast in a Bloomberg survey of 72 economists. A separate report may show consumer prices increased in March.
Foreclosures are pushing down property values by adding to the glut of unsold homes, prompting buyers to hold out for better bargains and undermining new construction. The acceleration in inflation is unlikely to dissuade Federal Reserve policy makers from lowering interest rates again later this month to cushion the economy from the housing-led slowdown.
“Construction activity is going to continue falling,” said Celia Chen, an economist at Moody’s Economy.com in West Chester, Pennsylvania. “The market still has high levels of inventories and this is going to constrain pricing.”
Economists’ estimates for starts ranged from 950,000 to 1.1 million. Construction dropped to a 1 million pace in December, the lowest level since May 1991. The Commerce Department’s report is due in Washington at 8:30 a.m.
Permits, a gauge of future construction, probably fell to a 970,000 rate, the lowest since August 1991, according to the survey median.