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According to an IHS Global Insight Sadness report out today, housing starts dropped 10 percent in March with “flat” single-family starts, and multi-family starts plummeting to 29 percent.

What about those “glimmers of economic hope?” A few days ago, President Barack Obama talked about mortgage interest rates reaching historic lows, and an uptick in refinancing.

Well, the housing starts data isn’t all bad, says IHS. “The headline numbers are disappointing. But the details indicate that the market for single-family homes is testing the bottom (good news), while multi-family construction continues to slump (bad news).”

Here’s the rest of the report, if you’re curious:

Single-family construction was flat for the third straight month. Single-family permits—the key number in the report—slipped 7.4%, partly offsetting February’s 16.1% gain. Despite the March drop, single-family permits are still above their December 2008 level. Single-family permits fell in all four regions, but appear to be stabilizing in the South and Midwest. The numbers for the South matter more because this region accounts for about 55% of single-family housing starts and permits. 

The market for multi-family homes is still slumping. Multi-family permits and starts are half what they were in July 2008. This sharp decline is likely related to financing. Some builders are overwhelmed with debt. Others cannot find funding to finance projects with positive net present values.

February 2009 was the eighth-driest and 27th-warmest February in the 1895–2009 record, according to the National Climatic Data Center. Builders responded to this spell of good weather by starting homes they otherwise would have started in March or later. March’s drop in starts and permits, to some extent, is therefore payback for February’s good weather.

We are not expecting much of an improvement in residential construction until the second half of this year. Indeed, in the first quarter (which is now behind us), residential construction likely chopped 1.5% points off real GDP growth. The second quarter bite will be smaller, but may still exceed 1%. If financial markets improve and banks ramp up lending, the housing market should hit bottom later this year—and for the first time since the fourth quarter of 2005, start adding to growth

Image by Concrete Forms, Flickr Creative Commons