Two reports on new residential construction came out on Tuesday - one of which showed a slowing in new home construction and the other revealing a growing unease among home builders about the near term future of their industry.

The U.S. Census Bureau released its monthly joint report with the U.S. Department of Housing and Urban Development on March numbers of both building permits issued and actual housing starts. These were substantially below revised figures for February although still running higher than March 2005 numbers.

On a seasonally adjusted annual basis there were 2,059,000 privately-owned housing units permitted during March compared to the revised February total of 2,179,000, a drop of 5.5 percent but still 1.9 percent above the March 2005 estimate of 2,021,000. Single family authorizations were at a rate of 1,542,000, 6.9 percent lower than last month while permits for units in buildings containing five units or more totaled 436,000 (annualized) compared with 432,000 the previous month. The report does not include two-to-four family units as available statistics do not meet the agencies' reliability standards.

Housing starts in March were down 7.8 percent from the revised February estimate at 1,960,000 units. This figure was still 6.9 percent above the same month in 2005. Multiple family units were started at an annualized rate of 334,000 compared to 283,000 in February and 249,000 one year ago.

Housing completions which reflect a market view that is several months old were at a seasonally adjusted annual rate of 2,218,000, 7.8 percent higher than in February and a whopping 23.4 percent higher than in March 2005.

The number of housing units permitted but not started increased from 215,100 in February to 235,600 in March. The March figure in 2005 was 221,200. The agencies do not offer an opinion as to whether this reflects growing builder caution, problems with construction financing, or just a normal timing thing.

Also on Tuesday the National Association of Home Builders released their Housing Market Index for April. The Index, a joint effort of NAHB and Wells Fargo measures the perceptions of home builders about both current single-family home sales and their expectations for the following six months as either "good," "fair," or "poor" and the traffic of potential buyers on a scale of "high to very high," "average" or "low to very low." Responses in each of these categories are used to calculate a seasonally adjusted index. Any number over 50 indicates that more builders view sales conditions as good rather than poor. The index was at 67 one year ago.

The most recent HMI declined four points to 50 from a downwardly revised combination score in March. The index for current single-family sales slipped five points while still remaining in the positive at 54 for April. Sales expectations for the next six months were also down four points to 58 and the measurement for traffic of prospective homebuyers (the number of people looking) slipped to 39 from 40 the previous month.

Home builders in the West were more optimistic about market conditions this month than they were in March, scoring a four-point gain in confidence to 70 after a significant decline in March. Builders in the Northeast were most pessimistic about the short-term future of the market; their HMI score dropped seven points to 49.

NAHB posts a strong disclaimer on its website about the index stating that it "is strictly the product of NAHB Economics and is not seen or influenced by any outside party" prior to its publication. It will be interesting to see how or if April's index of homebuilder attitudes correlates with housing and permit starts over the next few months.