New home construction in the US slowed last month as a flattening of interest rates gave way to a lull
The number of new-build homes fell 14.7% in March to 1.32 million on an annual basis, the lowest since August, government data showed on Tuesday. The figure was weaker than all estimates in a Bloomberg survey of economists.
Construction permits, which indicate future construction, fell to 1.46 million in March. Both the start and the permits were revised higher in February.
Single-family home construction has fallen the most in about three years, while the pace of multi-family home construction has fallen to its lowest level since the pandemic began. Permits for both also declined.
After ramping up construction work in recent months, builders may be taking a breather. The supply of new homes for sale is almost the highest since 2008.
The report on home construction starts showed that the number of single-family homes already under construction rose to the highest level since May, so builders may not be planning to build any more homes. Similarly, completions fell, indicating builders are focusing on ongoing projects.
The numbers represent a blemish in the nation’s housing recovery. Mortgage rates have largely stabilized at around 7%, and potential buyers and sellers are only slowly beginning to accept this as the new normal.
Sentiment is similar among builders as an industry group metric flattened in April,
Economists will get a fuller picture of the housing market in the coming days with upcoming releases on new and existing home sales in March.