U.S. housing begins suddenly rose in March; building permits grow
Key takeaways:
- U.S. homebuilding suddenly increased in March but created for single-family housing fell amid rising mortgage rates.
- Housing beginnings rose 0.3% to a seasonally adjusted yearly rate of 1.793 million units the previous month, the Commerce Department said.
- Economists surveyed by Reuters had predictions start falling to 1.745 million units.
- Permits for future home building grew 0.4% to 1.873 million units the prior month.
U.S. homebuilding unexpectedly increased in March but began for single-family housing fell amid growing mortgage rates.
Housing starts rose 0.3% to a seasonally revised annual rate of 1.793 million units the previous month, the Commerce Department stated on Tuesday. Data for February was adjusted higher to 1.788 million units from the earlier reported 1.769 million units.
Economists surveyed by Reuters had projections started dropping to 1.745 million units. Permits for future home building grew 0.4% to 1.873 million units last month.
According to data from mortgage finance agency Freddie Mac, the 30-year fixed-rate mortgage averaged 5.0% during the week completed on April 14, the highest since February 2011, up from 4.72% in the last week. Further gains are possible with the Federal Reserve assuming a bold economic policy pose as it fights sky-high inflation.
The Fed in March increased its policy interest rate by 25 basis points, the first climb in almost three years. Economists predict the U.S. central bank will hike rates by 50 basis points next month and trim its asset portfolio shortly.
Increasing borrowing prices combine with higher home costs to lower housing affordability for first-time customers. The National Association of Home Builders/Wells Fargo Housing Market Index fell to a seven-month low in April, with builders condemning the “jump in mortgage rates and continued supply chain troubles.”
Still, this year, the record low accommodation supply should persist in underpinning homebuilding.