Residential starts fell -0.2% and building permits dropped -3.2% in April 2022.

New Home Construction Lost Steam in April

Amid the steepest climb in mortgage rates in decades and ongoing supply-side challenges, residential starts dipped -0.2% to a 1.72M annualized rate in April, according to the latest government data from the US Census Bureau.

Single-family starts plunged -7.3% in April while multifamily starts jumped +15.3%. Meanwhile, applications to build, essentially a proxy for future construction, dropped -3.2% to an annualized rate of 1.82M units.

Are you ready to learn what your DISC personality style is? You know it’s critical that you understand what your natural personality style is. Once you have obtained this knowledge everything in your business and personal life will change for the better. Tim and Julie Harris are making it super simple for you to have this powerful info. Now, text the word YOU to 47372, and when you do you will instantly receive a special exclusive text link. Next, you will complete your own DISC personality test.. the results will be shared with you instantly once you complete the simple and fun test, no strings attached. Simply text the word YOU to 47372 and click the link.

P.S. (Limited time: no charge to take the complete test)

* 4 Msgs/Month. Reply STOP to cancel, HELP for help. Msg&data rates may apply. Terms & Privacy:

Housing completions were down -5.1% m/m to a seasonally adjusted 1,295,000 in April and down -8.6% y/y.

The combination of home builders having to contend with high material prices (+19% y/y), decades-high inflation which is spurring a steep surge in borrowing costs and difficulty in obtaining/securing buildable lots and labor resulted in pushing down homebuilder sentiment in April to the lowest level since June 2020.  (See the article posted on this week’s calendar about homebuilder sentiment.)

Demand for New Homes Waning

This slowdown in new home construction activity comes at a time when mortgage rates peaked at 5.593% on May 6 and rates on 30-year fixed-rate mortgages came down 11 basis points to 5.479% as of May 16, according to Optimal Blue Mortgage Market Indices.

Obviously, declining consumer demand in new home construction and increasing interest rates go hand-in-hand.

“New residential construction is running into noticeable headwinds as the Federal Reserve’s monetary tightening, while aimed at curbing runaway inflation, increasingly pushes borrowing costs out of reach for millions of buyers,” said Senior Analyst George Ratiu.  “With mortgage rates surging over 200 basis points in the past four months alone, many home shoppers are hitting a hard ceiling on their budgets and demand for new homes is waning as a result.”

Construction Backlogs Climbed to Highest Level in Over 15 Years

This latest Census Bureau report on new home construction indicated that the number of single-family homes authorized for construction but not yet started (backlogged) increased to the highest level since 1974.

New home builders, however, did make headway in having a record-breaking number of 815,000 single-family properties under construction in April, the most since 2006.

URGENT: Are You Worried About Having A Slower Start To The Year? Don’t Hit The Panic Button, Learn How To Have Massive Success In A Shifting Market. When You Attend This Exclusive Training You Will Learn 17 Surprising Secrets Of The Top 100 $ Millionaire Agents. Claim Your FREE Spot Now. After You Have Attended This Event You Will Experience A Huge Feeling Of Relief Knowing You Will FINALLY Laugh At Your Money Worries – You Will Have Your Own Personalized 2022 Step-By-Step Business And Lead Generation Plan. Learn Now How To Generate 100’s of Motivated Leads for FREE, Without Coming Off As A Pushy Salesperson and Losing Your Soul. You Will Soon Know How To Become One of the 1000s of Agents Making HUGE Money In This Changing Market. Claim your FREE spot now. YES, I Want To Attend The FREE Webinar! <——Click To Register

P.S. Free Webinar, Limited Space. Less Than 300 Spots Still Available. 

Thanks to Bloomberg and Inman.

Claim Your FREE Real Estate Treasure Map!