Awful New Construction Data Underlines Enduring US Housing Dilemma
The US housing market remains stuck in a kind of limbo.
The pace of new construction tumbled more than 14% in March to the slowest since August, data released on Tuesday showed.
To call the update a disappointment would be an understatement, although I should note that this series is of course quite volatile. Caveats aside, the headline starts print was below every estimate. Single-family starts fell the most since a 15% decline in April of 2021.
As the figure shows, multifamily wasn't any
I live in a developing neighborhood and until recently the market had been absorbing all the units builders could supply. I checked yesterday and there are a dozen built units waiting to be sold. I have also noticed the work crews getting smaller indicating builders are slowing down the rate of production.
Maybe buyers are starting to feel more strapped by higher rates. While not impacted by mortgage rates, I feel much more financially constrained than I did a year ago. Insurance premiums have gone up, energy costs have gone up, grocery bills are higher. Life feels very expensive in a way it didn’t even 12 months ago.
Interesting comment. It’s only temporary. Sales will rise again. Don’t worry about it unless it stays that way into the autumn.
My concern now is that the market seems to be less dynamic overall and that it may continue this way for a long spell with higher rates. Looking forward to a more loose and relaxed market and lowering rates.
But in the end, isn’t this required in order for rates to go back down ? That a slow down happens either strongly enough or long enough to reduce demand in all “non-necessary” things and hence, lower inflation ? Though yes, shrinking supply of new homes will favor inflation. But then again, don’t builders slow construction because of slowing demand ? And another then again is that they may slow construction because their funds are better invested in treasuries in this rate environment with lower risk. Well then, I don’t have really an idea of how this is unfolding.