Reuters - U.S. single-family homebuilding tumbled in March, and while new construction remains underpinned by a severe shortage of previously owned houses for sale, a resurgence in mortgage rates is pushing potential buyers to the sidelines.
The report from the Commerce Department on Tuesday also showed permits for future construction of single-family houses fell to a five-month low. Residential investment rebounded in the second half of 2023 after contracting for nine straight quarters, the longest such stretch since the housing market collapse in 2006. But the recovery appears to be losing steam.
Single-family housing starts, which account for the bulk of homebuilding, dropped 12.4% to a seasonally adjusted annual rate of 1.022 million units last month, the Commerce Department's Census Bureau said. Data for February was revised higher to show single-family starts rebounding to a rate of 1.167 million units instead of the previously reported 1.129 million units.
Single-family home building increased 21.2% on a year-on-year basis in March.
Wet weather could have impacted groundbreaking activity last month. Homebuilding fell in the Northeast, Midwest and the densely populated South, but rose in the West.
The latest government data showed there were 757,000 housing units on the market in the fourth quarter, well below the 1.145 million units before the COVID-19 pandemic.
Housing Completions Decline
Starts for housing projects with five units or more plunged 20.8% to a rate of 290,000 units, the lowest level since April 2020. Overall housing starts plummeted 14.7%, the biggest drop since April 2020, to a rate of 1.321 million units in March.
Economists polled by Reuters had forecast starts would fall to a rate 1.487 million units.
Permits for future construction of single-family homes fell 5.7% to a rate of 973,000 units in March, the lowest level since last October. That likely reflects the recent rise in mortgage rates and suggests slower homebuilding activity ahead.
Multi-family building permits were unchanged at a rate of 433,000 units. Building permits as a whole dropped 4.3% to a rate of 1.458 million units, the lowest level since last July.
Economists expect housing made a small contribution to gross domestic product growth in the first quarter. The fortunes of the housing market are seen tied to upcoming inflation data.
The number of houses approved for construction that were yet to be started rose 0.7% to 273,000 units in March. The single-family homebuilding backlog was unchanged at 141,000 units.
The completion rate for that housing segment declined 10.5% to 947,000 units, suggesting that supply could remain low and keep prices elevated.
Overall housing completions decreased 13.5% to a rate of 1.469 million units. Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month over time to bridge the inventory gap.
Multi-family starts and permits surged in the aftermath of the pandemic, with the building backlog hitting record highs.
Sumber : Reuters
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