Construction of new residential construction, including single- and multi-family homes, fell by the largest proportion in four years as rising mortgage rates weakened housing activity.
Housing starts fell 14.7% month over month in March, from an annualized pace of 1.55 million units to an annualized 1.32 million units, according to data from the Census Bureau released Tuesday. Single-family home starts fell 12.4% month over month.
According to Jeffrey Roach, chief economist at LPL Financial, the data indicates that new home construction is “starting to show cracks in the pace of growth.”
“Housing construction is poised to slow as potential buyers indicate that now is a bad time to buy a home. Investors should expect residential investment to dampen GDP growth in the coming quarters. Real estate activity may not fully stabilize until the Fed begins its easing cycle. »
The new government data comes after builder confidence in April remained stable from the previous month, breaking four straight months of gains. The NAHB said, “Buyers are hesitant until they can better gauge where interest rates are headed. »
“Looking ahead, we still believe single-family home starts should benefit from the lack of used homes on the market, shifting demand toward new construction,” wrote Thomas Ryan, real estate economist at Capital Economics, in a note to clients following publication. .
“But this strength will be offset by weakness in multifamily housing starts, which we expect will remain around current levels, leaving total starts slightly higher than they currently are by the end of this year.”
The SPDR S&P Homebuilders ETF (XHB) was trading down more than 1% Tuesday morning.
News Source : finance.yahoo.com
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