The numbers: Construction on new homes rose 2.2% in April, as U.S. homebuilders continue to see strong demand from home buyers. Builders in the Midwest and West were particularly active this spring.
Housing starts rose to a 1.4 million annual pace last month from 1.37 million in March, the government said Wednesday, meaning that’s how many houses would be built over an entire year if construction took place at the same rate in every month as it did in April.
The data roughly matched economists’ expectations on Wall Street. The numbers are seasonally adjusted.
Both single and multi-family construction rose in April. The strength in new construction comes from strong demand from would-be home buyers who don’t have many options in the resale market.
Building permits, a key indicator of the pace of future construction, fell 1.5% to a 1.42 million rate.The decline was larger than expected.
Key details: The construction pace of single-family homes rose 1.6% in April while apartment building rose 5.2%.
Homebuilders were active in the Midwest and West, where housing starts rose by over 30% in both regions, but single-family construction in the West was exceptionally strong, surging by nearly 60% in April.
Permits for single-family homes rose 3.1% in April while permits in buildings with at least five units fell by 9.7%.
Overall, housing starts are down year-over-year. The annual rate of total housing starts fell from 22.3% from the previous year.
Big picture: Homebuilders are seeing – and expect to continue seeing – strong demand from home buyers who don’t see many options in the resale market.
New listings of previously-owned homes are low, and buyers are seeing increasing competition, which is pricing some out.
Many homeowners don’t see an incentive to sell and face a tough housing market as 14 million mortgages were refinanced during the pandemic years and most of them were secured with an ultra-low mortgage rate. In contrast, the mortgage rate for a 30-year is double that rate.
Between 2000 and 2019, new homes only comprised about 13% of listings, the National Association of Home Builders said. In March, 33% of homes listed for sale were new – and they were in various stages of construction.
Most Americans feel frustrated by the housing market. A recent poll revealed that the number of Americans who think it’s a bad time to buy a home has hit a 45-year high.
Market reaction: U.S. stocks
DJIA,
SPX,
were set to open higher early Wednesday. The yield on the 10-year Treasury note
TMUBMUSD10Y,
fell below 3.52%.
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