Will US building permits for March 2026 be above 1.350M?

Despite the severe macroeconomic shocks in March, the US housing market entered the month with significant structural momentum. February 2026 housing starts surged 9.8% to 1.494M, indicating that builders were actively moving forward with projects and maintaining a healthy pipeline of authorizations. Furthermore, the NAHB Housing Market Index edged up from 37 to 38 in March, suggesting that builder sentiment remained stable during the initial phase of the geopolitical shock. The historical base rate provides a formidable floor for building permits. The 1.350M threshold has not been breached to the downside in over 30 months, demonstrating remarkable resilience through previous rate hike cycles. Even with the 4.7% month-over-month decline recorded in January 2026, the annualized rate of 1.386M still maintained a 36,000-unit buffer above the threshold. Finally, the permitting process often lags behind real-time sentiment shifts. Because March is seasonally one of the strongest months for permit applications as developers prepare for the peak spring building season, the administrative inertia of early-month filings could easily bridge the gap needed to keep the total seasonally adjusted annual rate above 1.350M.

The primary driver of permitting activity, the 30-year fixed mortgage rate, experienced a severe shock in March 2026. Following the outbreak of conflict with Iran on February 28, rates jumped from 5.98% to 6.57%. This sudden reversal in affordability led to a 20% collapse in mortgage applications in the final two weeks of March, directly signaling a freeze in new residential planning and buyer demand. Compounding this geopolitical and interest rate shock is the partial government shutdown that began on January 31, 2026. The shutdown has severely disrupted federal housing functions, including HUD and the IRS, creating administrative bottlenecks that force builders to delay pulling new permits. With January permits already down 4.7%, a further decline of just 2.6% across February and March would be enough to breach the 1.350M floor. The multi-family housing sector is also showing signs of a severe downturn, with permits for buildings with 5+ units plunging 12.4% in January. If this volatility continues into March, driven by the uncertainty of the Iran conflict and surging oil prices, a similar double-digit drop in the multi-family component would easily drag the total permit count below the threshold.