Housing starts unexpectedly rose 0.8% in March, according to the U.S. Census Bureau and Department of Housing and Urban Development, which announced the numbers this morning (April 17).

Starts totaled 1,518,000, up from 1,506,000 in February, which was downwardly revised from 1,525,000. The March number was 23% below the total of 1,972,000 posted in March 2006. SEE THE REPORT HERE

March single-family starts were up 2% to 1,218,000, up from 1,194,000 in February. Multi-family starts, defined as buildings with five units or more, came in at 262,000.

Building permits also were up 0.8%, to 1,544,000 in March compared to 1,532,000 in February, with single family authorizations up 1.4% to 1,114,000 and the rate for multi family at 358,000. Housing completions fell 0.7% to 1,632,000 from Feburary's 1,643,000, with single-family up 1.5% to 1,329,000 and multi-family completions at 264,000.

The home building research team at J.P. Morgan Securities took the relatively slight increase as a positive sign that builders would be able to work off excess inventory. In a research note put out later in the day, Michael Rehaut, J.P. Morgan's senior home building analyst, stated, "Given both the continued meaningful year-over-year declines in both starts and permits, we continue to believe this is a positive in terms of working down industry supply, which, combined with continued efforts by large builders to restrict their own starts and lower inventory, as well as more aggressive incentive levels, should prevent the reoccurrence of further excess inventory being created in the market."

The research noted continued, "We believe leading fundamentals are either beginning to stabilize or are on the cusp of recovering over the next few quarters."