In April, new residential construction in the United States experienced a rebound, as reported by the Commerce Department on Thursday. However, the report also revealed an unexpected ongoing decline in building permits.
The Commerce Department noted that housing starts surged by 5.7%, reaching an annual rate of 1.360 million in April, following a significant 16.8% drop to a revised rate of 1.287 million in March.
Economists had projected housing starts to rise by 7.5% to an annual rate of 1.420 million from the previously reported 1.321 million in the preceding month.
The recovery was primarily led by multi-family starts, which soared by 30.6% to an annual rate of 329,000 after a steep 38.8% fall to a revised rate of 252,000 in March.
Conversely, single-family starts showed a slight decline of 0.4%, reaching an annual rate of 1.031 million in April after an 8.7% drop to a revised rate of 1.035 million in March.
Furthermore, the Commerce Department reported that building permits fell by 3.0% to an annual rate of 1.440 million in April, following a 5.0% decrease to a revised rate of 1.485 million in March. Building permits, which serve as an indicator of future housing demand, were anticipated to increase by 1.5% to an annual rate of 1.480 million from the originally reported 1.458 million in the prior month.
Multi-family permits declined by 7.4% to an annual rate of 464,000 in April after a 6.5% fall to a revised rate of 501,000 in March. Similarly, single-family permits saw a reduction of 0.8%, reaching an annual rate of 976,000 in April, following a 4.2% slump to a revised rate of 984,000 in March.
In a separate report released on Wednesday, the National Association of Home Builders disclosed an unexpected drop in U.S. homebuilder confidence for May. High mortgage rates have adversely impacted sentiment.
The NAHB/Wells Fargo Housing Market Index fell to 45 in May from 51 in April, contrary to economists' expectations that the index would remain unchanged.
This drop in homebuilder confidence marks the first decline since November 2023, with mortgage rates averaging over 7% for the past four weeks, according to data from Freddie Mac.
