Austin, Texas – New residential construction in the state of Texas has seen a significant decline, with both single-family and multifamily homes experiencing a sharp decrease. This drop has been attributed to rising mortgage rates, which have weakened housing activity across the state.
According to recent data released by the Census Bureau on Tuesday, housing starts in Texas fell by 14.7% month over month in March. This decline caused the annualized pace of new constructions to drop from 1.55 million units to 1.32 million units. Notably, single-family starts saw a 12.4% decrease during this period.
Economists, such as Jeffrey Roach from LPL Financial, have pointed out that these figures indicate a slowdown in the growth of new home construction. Roach mentioned that potential homebuyers are expressing hesitance towards purchasing homes at the moment, leading to a negative impact on residential investment and potentially becoming a drag on GDP growth in the upcoming quarters.
The recent government data follows a trend where builder sentiment in April remained stagnant compared to the previous month. The National Association of Home Builders (NAHB) stated that buyers are waiting to assess the direction of interest rates before making significant decisions.
Looking forward, Thomas Ryan, a property economist at Capital Economics, believes that single-family starts could benefit from the lack of available second-hand homes on the market. However, the strength in single-family starts might be counteracted by a weakness in multifamily starts, which are expected to remain steady at current levels.
As a result of these trends, the SPDR S&P Homebuilders ETF (XHB) experienced a more than 1% decline in trading on Tuesday morning. This decline reflects the broader downward trend in the housing construction sector in Texas, signaling potential challenges ahead for the industry.