U.S. single-family homebuilding and permits tumbled in March as soaring mortgage rates increased costs, but residential construction remains underpinned by a severe shortage of houses.
The report from the Commerce Department on Tuesday also showed a record backlog of homes approved for construction, but yet to be started. It followed on the heels of news on Monday that sentiment among single-family homebuilders dropped to a seven-month low in April.
Single-family housing starts, which account for the biggest share of homebuilding, dropped 1.7% to a seasonally adjusted annual rate of 1.200 million units in March. Single-family homebuilding plummeted in the Northeast. It also fell in the West and densely populated South, but rose in the Midwest. The surge in the volatile multi-family segment helped to lift overall housing starts 0.3% to a seasonally adjusted annual rate of 1.793 million units, the highest since June 2006.
Stocks in Wall Street were trading higher. The dollar gained versus a basket of currencies. U.S. Treasury prices fell.The 30-year fixed-rate mortgage averaged 5.0% during the week ended April 14, the highest since February 2011, up from 4.72% in the prior week, according to data from mortgage finance agency Freddie Mac.
"It is too early to assess the impact of higher mortgage rates on home purchases, but it appears that there is still growing excess demand for housing," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York. "This suggests that home construction could hold up well even in the face of a moderate pullback in demand."
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