Finishing up an exceptionally strong first quarter in which housing proved to be a significant growth factor for the national economy, nationwide housing starts retreated 7.8% to a healthy seasonally-adjusted annual rate of 1.65 million units in March, according to the U.S. Commerce Department. The National Association of Home Builders (NAHB), Washington, D.C., said the drop was expected and that it came on the heels of the best month for new-home production in more than three years.

“Today’s report shows housing production is right in line with our forecasts, and the decline is certainly no cause for alarm in the housing industry,” said Gary Garczynski, president of the NAHB and a builder/developer from Woodbridge, Va. “Thanks to extraordinarily good weather and financing conditions early in the year, single-family housing starts reached their highest level in more than 20 years this February, at 1.47 million units. That pace of activity was unsustainable in terms of underlying demographic demand.”

March’s decline in housing starts was confined to the single-family sector, where production slowed 11.4% to a rate of 1.3 million units. Multifamily housing starts rallied in March, rising nearly 9% to a seasonally-adjusted annual rate of 343,000 units. The rise in apartment building was entirely responsible for a 15.5% gain in housing starts registered in the Northeast, while every other region recorded declines in overall housing production. In the South, the shortfall was almost 13%, while in the Midwest it was 7% and in the West it was 6.2%. Housing permits, which can be an indicator of future building activity, also fell in March, by about 10% overall to a 1.6 million-unit rate. Single-family permits were down 10.2% to 1.2 million units, while multifamily permits were down 8.6% to 361,000 units. “These are still quite good numbers,” Garczynski said. “For the year as a whole, we’re on pace to produce about 1.64 million new housing units, up by about 2% from last year.”