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Residential Construction Rises

New housing starts grew in March, according to the U.S. Census Bureau. NAM Chief Economist Chad Moutray broke it down for us.

The numbers: “New residential construction activity edged up 0.3% from 1,788,000 units at the annual rate in February to 1,793,000 units in March, the fastest pace since June 2006,” said Moutray.

  • “Multifamily housing starts, which can be volatile from month to month, rose 4.6% from 567,000 units to 593,000 units, but single-family starts declined 1.7% from 1,221,000 units to 1,200,000 units.”
  • “On a year-over-year basis, new residential construction has increased 3.9%, but with single-family activity down 4.4% since March 2021.” 

What it means: “These figures reflect resilience in the housing market, with solid housing starts overall, despite significant challenges from rising building costs, higher mortgage rates, affordability issues and difficulties in finding workers,” said Moutray.

What’s next: “With mortgage rates soaring to levels not seen since 2018, there could be some cooling in the months ahead, but the data do not reflect that yet,” said Moutray. “For their part, builders were less optimistic in their outlook, with inflation, affordability and higher rates pushing the NAHB Housing Market Index to a seven-month low in April.” 

  • “Yet, housing permits have also proved resilient, increasing 0.4% from an annualized 1,865,000 units in February to 1,873,000 units in March,” said Moutray.
  • “That was just shy of January’s reading (1,895,000 units), which was the best reading since May 2006, consistent with still-healthy growth in housing construction despite numerous challenges and slower single-family activity.”
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