Originally Published: 18 APR 23 09:49 ET

By Anna Bahney, CNN

(CNN) -- US home building pulled back in March, falling 0.8% in March from February as a decline in multifamily home construction failed to balance out an increase in single-family homes.

Housing starts, a measure of new home construction, was down 17.2% from a year ago, according to data released Thursday by the Census Bureau.

After surging in February following five consecutive months of falling, March housing starts fell to a seasonally adjusted annual rate of 1.420 million, down from the revised February estimate of 1.432 million.

Single‐family housing starts in March rose 2.7% from the revised February figure, at a seasonally adjusted annual rate of 861,000.

Housing starts had big drops in May and July last year, when spiking mortgage rates pushed many prospective home buyers to the sidelines. Starts bounced back slightly in August, but fell through January.

Since then, with more positive economic news, building has perked up. As mortgage rates trended lower, builders have begun to feel more optimistic that conditions may improve in 2023.

Building permits, which track the number of new housing units granted permits, also fell in March following two months of gains, falling 8.8% from the revised February rate, and were down 24.8% from a year ago. In March, building permits were at a seasonally adjusted annual rate of 1.413 million.

"March had its fair share of economic uncertainly with news of failing banks, which may have spooked some buyers," said Kelly Mangold of RCLCO Real Estate Consulting. "However, as spring home selling season begins, it is encouraging that interest rates remained stable, and even dropped toward the end of the month."

As spring is a historically popular time for sales, she said, builders may still look to increase their inventory in the coming months to hopefully capture buyers who may have been sidelined over the past year but are looking to finally enter the market.

"For buyers and sellers contending with a very limited inventory of existing homes, the pipeline of new homes holds the promise of more options, albeit not a lot of affordable ones," said George Ratiu, chief economist of Keeping Current Matters, a Real estate consultant company.

The median price of a new home in February of this year was $438,200, a 2.5% premium over last year's already-high price, he said.

"Homeowners looking to move up to a new home may want to look at rate buy-down options with builders to make a deal more palatable in today's rate environment," Ratiu said.