Single Family Housing Starts Dip in April

Single Family Housing Starts Dip in April

Residential News » Washington D.C. Edition | By David Barley | May 22, 2024 8:43 AM ET

New government data shows U.S. single-family homebuilding and permits fell in April 2024, amid a resurgence in mortgage rates, but new construction remains supported by an acute shortage of houses for sale.

Single-family housing starts, which account for the bulk of homebuilding, slipped 0.4% to a seasonally adjusted annual rate of 1.031 million units last month, reports the Commerce Department's Census Bureau.

Data for March 2024 was revised higher to show single-family starts falling to a rate of 1.035 million units instead of the previously reported 1.022 million units. Housing starts increased 17.7% year-on-year in April.

The average rate on the popular 30-year fixed mortgage pulled back from a five-month high of 7.22% to 7.09% last week, data from mortgage finance agency Freddie Mac showed, as easing labor market conditions put two rate cuts from the Federal Reserve this year back on the table.

The rise in mortgage rates over the course of April and the first week of May caused confidence among homebuilders to slump this month.

The nation is facing a severe housing shortage, which should keep new construction supported. Government data showed there were 728,000 housing units on the market in the first quarter, well below the 1.145 million units before the COVID-19 pandemic.

Starts for housing projects with five units or more soared 31.4% to a rate of 322,000 units in April. Overall housing starts increased 5.7% to a rate of 1.360 million units.

Recent polls had forecasted starts rebounding to a rate of 1.420 million units.

Permits for future construction of single-family homes dropped 0.8% to a rate of 976,000 units in April. Multi-family building permits tumbled 9.1% to a rate of 408,000 units.

Building permits as a whole fell 3.0% to a rate of 1.440 million units.

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Lawrence Yun

NAR Chief Economist Lawrence Yun commented, "Housing starts in April bounced back slightly after a large decline in the previous month. The latest monthly gain of 5.7%, following a 17% fall in March, was led by more activity in the South region. The total annualized rate of 1.36 million is insufficient overall. The country needs around 1.6 million or higher for a few years to truly bring about a balance in the housing sector. On a positive note, albeit only for the short term, the completion of homes is rising due to past months' higher housing starts. 

The 1.62 million housing unit completions in April was the second-highest monthly figure in 15 years. Expect apartment vacancy rates to trend higher, rents to slow down, and more homebuyers able to buy newly constructed homes. However, given the recent declines in housing starts, home completions will steadily show declines in about six months. The housing shortage is not going away. The laws of supply and demand tell us that home prices are on firm ground and could even reaccelerate in the future unless more is done to boost supply."

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