The construction of single-family homes in the United States and the issuance of building permits both increased in February, raising the possibility that the housing market was rebounding after being severely impacted by higher mortgage rates.
The majority of new homes are single-family homes, and last month saw an increase in single-family housing starts of 1.1% to an annual rate of 830,000 units, according to data released by the Commerce Department on Thursday. The previously announced 841,000 unit-pace for single-family homebuilding in January was revised downward to a rate of 821,000 units. Streamlining projects from blueprint to reality with precision and efficiency through our expert construction takeoff service.
The construction of single-family homes rose in the Northeast and West but fell in the heavily populated South and Midwest. In February, starts of single-family homes decreased 31.6% compared to the same month last year.
The Federal Reserve’s most aggressive interest rate hike cycle since the 1980s to control inflation has stifled the housing market. Nonetheless, the housing market collapse may have reached its peak. According to a study released on Wednesday, the National Association of House Builders/Wells Fargo Housing Market Index rose in March for the third consecutive month, but confidence among builders is still low.
Mortgage rates, which had resumed their upward trend, may now begin to decline as a result of the sharp drop in U.S. Treasury yields that followed the recent failure of two regional banks, which raised concerns about a possible banking sector contagion. According to some experts, financial market volatility may make it more difficult for the Fed to raise rates again the following week.
The number of housing projects with five units or more that have begun construction increased by 24.1% to 608,000 units, the largest number since last April. Rental housing demand continues to support the development of multi-family dwellings.
The pace of housing starts overall increased 9.8% to 1.450 million units last month, the highest level since September, as both single-family and multi-family construction increased. Reuters polled economists, who predicted that starts would increase to a rate of 1.310 million units in February. In February, starts decreased 18.4% compared to the previous year.
Building permits for single-family homes grew 7.6% to 777,000 units. They had decreased for 11 months in a row.
Permits for residential developments with five units or more increased by 24.3% to 700,000 units. The total number of building permits increased by 13.8% to 1.524 million units.
The number of dwellings that have been sanctioned for building but have not yet been built remained constant at 294,000 units.
The backlog for single-family homes declined by 3.0% to 130,000 units, but the segment’s completion rate rose by 1.0% to 1.037 million units. The number of single-family homes now under construction decreased 1.7% to 734,000 units.
