New construction production rose less than forecast in April and permits for new activity fell, indicating that the recent rise in mortgage rates is stalling builders.
Home construction starts rose 5.7% to 1.36 million on an annual basis, after downward revisions from previous months, government data released Thursday showed. The average forecast in a Bloomberg survey of economists called for a rate of 1.42 million.
RELATED:
Permits allowed for the construction of single-family homes have now fallen for three months in a row to the lowest level since August, after showing an upward trend at the end of last year. This could pose an obstacle to the start of housing construction in the future.
Building permits for all units, a benchmark for future construction, fell 3% to a figure of 1.44 million, the lowest since late 2022. That was mainly due to a big drop in permits for apartment complexes.
Data early in the year indicated that inflation was proving to be stubborn, prompting traders to withdraw their bets on the Federal Reserve cutting rates this year, keeping mortgage rates above 7% .
RELATED:
But figures on Wednesday showed growth in consumer prices
The number of single-family home completions rose to 1.09 million annually, the highest since November 2022. That could explain the softer progress in new groundbreaking.
Starts of multifamily projects with apartments increased by almost 31%, while construction of single-family homes fell slightly.
The government’s report on housing starts showed that new construction fell sharply in the Northeast but rose in the South and Midwest. They also fell in the West.
Housing starts figures are volatile and the government report shows that 90% are confident that the monthly change ranges from a decline of 5.3% to an increase of 16.7%.
The April report included seasonal effects