(May 21): US housing starts declined in April as construction of single-family homes dropped by the most in nearly a year, suggesting builders are growing cautious amid higher mortgage rates.
New residential construction decreased 2.8% last month to an annualised rate of 1.47 million homes, according to government figures released on Thursday.
Starts of single-family homes declined 9%, the most since August, to an annualised 930,000 pace. Multi-family housing starts, however, rose more than 10% to the highest level since May 2023.
The report also showed single-family permits, a leading indicator of future construction, fell 2.6% to the lowest level since August.
The figures suggest homebuilders remain focused on working off a still-elevated inventory of new properties. While sales have increased in recent months, most were homes that were already under construction or finished.
Numerous challenges remain for a sustained pickup in homebuilding, including rising mortgage rates, flagging consumer confidence and stretched household budgets.
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Separate figures out on Thursday showed little change in initial jobless claims last week, indicating layoffs remain muted overall.
New construction fell in the South but rose in the other three US regions on increases in multifamily projects. Single-family starts dropped in a four regions.
“Affordability challenges will keep homeownership out of reach for the median household, and will keep builders focused on bringing smaller and more affordable units to market,” says Stuart Paul, economist at Bloomberg Economics.
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The new residential construction data are volatile, and the government report showed 90% confidence that the monthly change ranged from a 13.8% drop to an 8.2% gain.
Meanwhile, the National Association of Realtors reported on Tuesday that pending sales of previously owned US homes rose for a third straight month in April.
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