New home construction, including single-family homes and multi-family homes, fell by the most in four years as rising mortgage rates weakened housing activity.
Housing starts fell 14.7% in March from the previous month, dropping from an annual pace of 1.55 million units to an annual rate of 1.32 million units, according to data released Tuesday by the Census Bureau. The number of single-family housing starts decreased by 12.4% from the previous month.
Jeffrey Roach, chief economist at LPL Financial, said the data shows that new home construction is “starting to see cracks in the pace of growth.”
“Home construction is likely to slow as potential homebuyers indicate now is a bad time to buy a home. Investors expect housing investment to be a drag on GDP growth in coming quarters.” “Housing activity may not fully stabilize until the Fed begins its easing cycle.”
The new government figures come after construction sentiment was flat in April compared to the previous month, marking the fourth straight month of increases. “Buyers are holding off until they can better gauge the direction of interest rates,” NAHB said.
Capital Economics real estate economist Thomas Ryan wrote in a note to clients in response to the announcement: “In the future, as existing homes remain on the market and demand shifts to new construction, “We still think single-family housing starts will benefit.” .
“However, that strength is offset by weakness in multifamily starts, with multifamily starts expected to remain near current levels and total housing starts by the end of this year slightly higher than now. It will be.”
The SPDR S&P Home Builders ETF (XHB) traded down more than 1% on Tuesday morning.
