The number of new home starts in the U.S. picked up slightly in March but is below the pace from a year earlier, according to a new U.S. Commerce Department report.

Housing starts increased 2.8% from February’s level, hitting an annual pace of 946,000 homes, but is 5.9% less than the March 2013 annual rate of just over 1,000,000. Single family home starts increased 6% from February to March, while multi-family units fell 3.1%.

The number of building permits issued, a barometer of future activity, fell in March by 2.4% from February’s level, but is 11.2% higher than the level from the same time a year earlier.  

New home starts during March rose the most in the Midwest, increasing 65.5% from February’s level, while also gaining 30.7% in the Northeast. Activity slowed 9.1% in the South and 4.5% in the West.

The overall figure for home starts in March is less than a consensus forecast from economists, however some builders say the reason for the decline is a shortage of workers.

“Housing data remains uneven at the end of the first quarter with little suggestion of underlying momentum building as we head into the spring selling season,” said Lindsey Piegza, chief economist with the investment firm Sterne Agee. “While we expect sales to remain positive, demand is likely to be tempered by minimal income and tepid job creation.”

She says temporary factors which spurred above-trend consumption of homes before the Great Recession, including rising equity markets, certainty in Washington, are still in play but have lost their potency, at least to some degree.

“Going forward, sustainable demand for housing will be a function of affordability,” Piegza said. “But amid even a minimal backup in mortgage rates, with tepid savings and limited income growth, many consumers will be priced out of the market.”

Meantime, a separate report, also released Wednesday, shows industrial production increased 0.7% percent in March after advancing 1.2% in February. The hike was greater than a consensus forecast from economists.

The rise in February was higher than previously reported primarily because of stronger gains for durable goods manufacturing and mining, according to the U.S. Federal Reserve.

For the first quarter as a whole, industrial production moved up at an annual rate of 4.4%, just slightly slower than in the fourth quarter of 2013.

In March the output of manufacturing rose 0.5%, the output of utilities increased 1% and the output of mines gained 1.5%. Manufacturing makes up 75% of industrial production.

Total industrial production in March was 3.8% above its level of a year earlier. Capacity utilization for total industry increased in March to 79.2%, a rate that is 0.9 percentage point below its long-run average from 1972 through 2013, but 1.2 percentage points higher than a year prior