Even though home builder sentiment held steady, builders pulled back on new construction last month, with Housing Starts falling nearly 15% from February. Starts for single-family homes, which make up the bulk of homebuilding and are the most crucial due to buyer demand, were also down 12.4%. There was a similar trend in future construction, with Building Permits moving lower despite much needed supply.
What’s the bottom line? The NAHB noted that higher than expected interest rates, hotter than anticipated inflation, and higher supply side costs all contributed to the construction slowdown last month. Danushka Nanayakkara-Skillington, NAHB’s Assistant VP for Forecasting and Analysis, added that single-family construction will also likely decline in April, given the drop in building permits last month.
Home prices should remain supported, as there still is not enough supply coming on the market to meet demand, showing that opportunities remain to build wealth through homeownership.