Housing inventories fell on Wednesday morning following new government data suggesting a weak recovery in new home construction.
The SPDR S&P Home Builders ETF (XHB) fell 1%, DR Horton Inc. (DHI), the largest U.S. home builder, fell nearly 2%, and Lennar (LEN) and Toll Brothers (TOL) fell 2% in the morning. % fell. transaction.
Construction of single-family and multi-family homes in April rebounded slightly from the previous month, but fell year over year and was lower than expected as rising mortgage rates suppressed housing activity.
Private housing starts rose at a seasonally adjusted annual rate of 1.36 million units in April, up 5.7% from March’s revised figure but down 0.6% from the same month last year, according to data released Thursday by the Census Bureau. Economists polled by Bloomberg had expected 1.42 million people.
“The recovery has not been as strong as expected, which may cast doubt on our above-consensus forecast for home construction,” Capital Economics economist Thomas Ryan said in a note after the release. said.
This is because home builders are not very confident in the housing market as mortgage interest rates remain high at over 7%. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) fell to 45 in May, down 6 points from April’s reading and the first decline since November 2023. A number below 50 indicates that more builders view the situation as follows: Poor rather than good.
Despite builders’ tough expectations, Ryan said single-family starts will reach 1.11 million units this year, “as home builders take advantage of the lack of existing homes on the market and demand shifts to new construction.” It is predicted that this may increase to.
But some of that strength could be offset by weakness in multifamily housing starts, which could keep total housing starts at 1.43 million by the end of the year, Ryan said.
