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Privately owned housing starts rose 2.2 percent month over month in April 2023 to a seasonally adjusted annual rate of 1,401,000 following a 0.8 percent dip in March, the U.S. Census Bureau reported on Wednesday, as buyers increasingly turn to new construction to meet their housing needs.
Year over year, starts were 22.3 percent below the April 2022 rate of 1,803,000.
Meanwhile, single-family housing starts inched up 1.6 percent in April 2023 to 846,000 from March’s revised estimate of 833,000.
Units in buildings of five units or more also saw a boost, with housing starts increasing to 542,000 in April compared to a seasonally adjusted annual rate of 515,000 in March.
Housing starts represent the rate of new home construction and are a leading indicator of future inventory levels.
Credit: Census Bureau
New building permits on single-family homes were up 3.1 percent from March at a rate of 855,000, while authorizations on multifamily buildings were at a rate of 502,000, up from a seasonally adjusted annual rate of 556,000 in March.
Single-family housing completions were 6.5 percent below the revised March rate to a rate or 971,000 in April. In March, completions hit a rate of 1,039,000. The rate of completion for units in buildings of five units or more was 400,000.
By region, housing starts were down month over month by 23.4 percent in the Northeast and by 6.3 percent in the South. The Midwest saw gains of 32.6 percent, and the West gains of 34.6 percent.
With affordability continuing to be a concern for homebuyers, builders are working to meet the shifting demand of the market, RCLCO’s Kelly Mangold said in an email sent to Inman.
“Housing affordability remains a concern with mortgage rates remaining above 6 percent and builders have begun to adjust their offerings to appeal to a more moderate price point,” Mangold said. “Smaller floorplans and slimmed down finish packages allow for more palatable pricing in today’s high interest environment.”
Inventory in the resale market has remained tight, as sellers are unwilling to relinquish the low 2 and 3 percent interest rates they acquired during the pandemic, Mangold added.
“Therefore, the increase in starts is poised to provide welcome relief for a constrained for-sale housing market and the limited supply of resale inventory has made new homes an appealing option for motivated buyers.”
Builder confidence is also making steady gains under these economic conditions. In May, builder confidence rose for the fifth straight month to 50, the National Association of Home Builders reported on Tuesday.