Homebuilders slowed the construction of new single-family homes in March as interest rates jumped, materials prices climbed, and construction delays continued.
Builders broke ground on new single-family home construction at a rate of 1,200,000, 1.7 percent below the revised February figure of 1,221,000, data from the Commerce Department’s Census Bureau showed Tuesday. Compared with a year ago, single-family starts are down 4.4 percent.
Permits for single-family construction fell by a sharp 4.8 percent in March compared with the prior month. Compared with March of last year, permits are down 3.9 percent.
The number of single-family properties under construction but not yet completed continued to climb, reaching 811,000, the most since 2006. The backlog is likely due to a shortage of materials and difficulties builders have had hiring workers. In February, there were 381,000 job openings in construction, near record highs.
The gap between starts and completions widened after the pandemic and has persisted ever since.
The single-family market is most sensitive to interest rates. In March, rates on the traditional 30-year fixed mortgage climbed sharply, rising from 3.6 percent at the start of the month to 4.67 percent a the end of the month. Rates have since continued to climb and now sit at around 5.25 percent. Higher mortgage rates combined with high prices have put home purchases out of reach for some U.S. families, particularly younger and first-time would-be buyers.
Construction of multifamily units climbed by a steep 7.5 percent in March compared with February. This part of the housing market is considered much less sensitive to mortgage rates. Compared with a year ago, multifamily starts are up 28.1 percent. Permits, a leading indicator of future building, were up 10.9 percent compared with February and 33.6 percent compared with a year earlier.
That burst of activity in apartment and condominium construction pushed the total housing start number higher than expected, to a seasonally-adjusted annual rate of roughly 1.79 million in March. That is a 0.3 percent increase from the upwardly-revised figures for the previous month. Compared with March 2021, housing starts were up nearly 4 percent. Total permitting for new homes came in at a seasonally-adjusted annual rate of roughly 1.87 million, an increase of 0.4 percent from February and up 6.7 percent from a year ago.
Analysts polled by Econoday had expected 1.75 million housing starts and 1.83 million permits.
COMMENTS
Please let us know if you're having issues with commenting.