Housing Starts Increased 2.2% in April
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Implications:  Home building rose slightly in April as developers continue to navigate a challenging housing market.  Looking at the details, both single-family and multi-unit starts contributed to the headline gain in April, although starts were revised down for prior months.  Developers continue to be cautious with the 30-year mortgage rate hovering near 7%.  However, it does look like single-family construction has found at least a temporary bottom.  One reason may be that some of the sticker shock from the rapid run-up in financing costs last year is beginning to wear off.  This is good news for overall starts because single-family construction has been largely responsible for the decline in activity in the past year.  Though groundbreaking on new residential projects is down 22.3% from a year ago, keep in mind that construction overall has hardly ground to a halt. Lots of projects were already in the pipeline, with the number of homes under construction hovering near the highest level on record back to 1970.  These figures also demonstrate a slower construction process due to a lack of workers and other supply chain issues.  Given that builders already have their hands full, it was not surprising to see permits for new projects fall 1.5% in April.  While we don’t think housing is going to be a source of economic growth in the year ahead, recent numbers are not what you’d expect to see if there was a severe housing bust like the 2000s on the way, either.

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Posted on Wednesday, May 17, 2023 @ 9:25 AM

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.