April 25, 2022
The U.S. Single-family homebuilding and permits in the United States fell in March as mortgage rates rose, although residential development remained hampered by a severe housing scarcity.
The Commerce Department’s report also revealed a record backlog of houses approved for building but not yet begun. It came on the heels of news on Monday that single-family homebuilder morale fell to a seven-month low in April.
The 30-year fixed mortgage rate has increased above 5% for the first time in more than a decade, as the Federal Reserve raises borrowing rates to combat skyrocketing inflation. The housing market is the most sensitive sector of the economy to interest rate changes.
“A lack of existing inventories should be positive for building activity,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York.
“However, high input costs and shortages, of both labor and materials, remain headwinds for builders. Rising mortgage rates that crimp demand will also be a consideration for building activity going forward.”
Permits for Construction
In March, the seasonally adjusted annual rate of privately owned housing units permitted by building permits was 1,873,000. This is 0.4 percentage point higher than the revised February rate of 1,865,000 and 6.7 percentage point higher than the March 2021 rate of 1,755,000. Singlefamily authorizations were 1,147,000 in March, 4.8 percent lower than the revised February total of 1,205,000. In March, there were 672,000 authorizations for units in buildings with five or more units.
Housing Starts
In March, private-owned home starts were at a seasonally adjusted annual pace of 1,793,000. This is 0.3 percent higher than the revised February estimate of 1,788,000 and 3.9 percent higher than the March 2021 rate of 1,725,000. The rate of single-family dwelling starts in March was 1,200,000, which is 1.7 percent lower than the revised February number of 1,221,000. The rate for units in buildings with five or more units in March was 574,000.
Completion of Housing
Privately-owned home completions reached a seasonally adjusted annual pace of 1,303,000 in March. This is 4.5 percent less than the revised February projection of 1,365,000 and 13.0 percent less than the March 2021 rate of 1,497,000. The rate of single-family dwelling completions in March was 1,000,000, which is 6.4 percent lower than the revised February rate of 1,068,000. The rate for units in buildings with five or more units in March was 292,000.
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