Housing starts suffered a dramatic slowdown in March, decreasing 11.4% from February to a seasonally adjusted annual rate of 1.32 million units, according to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

Single-family starts slowed even more, falling by 14.2% from February’s revised figure for a seasonally adjusted annual rate of 940,000 units, which is a 9.7% drop in housing starts from March 2024. The multifamily sector, including apartment buildings and condominiums, saw 371,000 units started during the month.

Despite the slowdown, the overall March housing unit starts were still up 1.9% from March 2024 levels.

March building permits rose 1.6% from February to a seasonally adjusted annual rate of about 1.48 million units. However, that was 0.2% below the permit rate for March 2024. Single-family home authorizations were at a rate of 978,000, which is 2% below the revised February figure of 998,000. Permits for multifamily homes in buildings with five units or more were at a rate of 445,000.

Housing completions in March fell 2.1% month over month to a seasonally adjusted annual rate of about 1.55 million. That was below February’s estimated completions of 1.58 million, but 3.9% above the rate for March 2024. Single-family home completions were at an annual rate of about 1.03 million units, up 0.9% from February’s rate of 1.02 million units. The March annual rate for completions of multifamily units in buildings with five or more units was 503,000.

Danushka Nanayakkara-Skillington, assistant vice president for forecasting and analysis for the National Association of Home Builders (NAHB), said high material prices and labor shortages continue to challenge home builders to meet the budget constraints of many families.

“The drop in March housing starts is a clear signal that affordability pressures are intensifying,” said Buddy Hughes, chairman of NAHB. “Elevated mortgage rates and rising construction costs are making it increasingly difficult to deliver homes at price points accessible to entry-level buyers. We’re seeing demand soften as more potential homeowners are priced out of the market.”