New residential construction declined in April, as single-family starts fell for the second month in a row, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development said in a press release.
Single-family housing starts dropped 7.3% from March’s revised estimate to 1,100,000, while multifamily starts jumped 16.8% to 612,000.
Altogether, the combined construction pace of single-family homes and buildings with five or more units was down 0.2% month over month, at 1,724,000 units. Starts were up 14.6% compared to a year ago.
“That’s a significant jump, and an indicator that builders are confident in housing demand, despite rising rates and a declining stock market,” Coldwell Banker Realty Executive Vice President Greg Rand said, referring to the year-over-year increase. “This is a continuation of the flight to the tangible that launched when the pandemic started, and continues. The common thread is that when the foundations are shaken by world events, people value hard assets and family. Both of those elements converge, and demand for houses grows.”
The strength of the multifamily market is a sign of the times, according to NAR Chief Economist Lawrence Yun.
“Builders are responding to higher mortgage rates and are chasing rising rents, with fewer homebuyers and more renters being forced to renew their leases,” he said in a statement. “Even before the rise in interest rates, apartment vacancy rates were at historic lows, and rents were accelerating. Some degree of a return to the office is also fueling back-to-city living where high rises are concentrated.”
The seasonally adjusted annual rate for privately owned housing units authorized by building permits was at 1,819,000 in April, down 3.2% from March and up 3.1% from a year earlier.
Privately owned housing completions hit an annual rate of 1,295,000 in April, 5.1% lower than March and 8.6% below a year before.
By region, single-family new home construction varied across the U.S. On a month-over-month basis, it fell 23.2% in the Northeast and 22% in the Midwest but rose 10.6% in the South and 3.3% in the West.
The apparent slowdown in the market is to be expected as it begins to return to pre-pandemic levels, First American deputy chief economist Odeta Kushi said.
“Housing demand is softening, but that means more balance is coming to the housing market,” she said. ”The housing market of 2020 and 2021 was the exception, not the norm.”