New York, NY – Residential construction in New York saw a significant decline, with both single-family and multifamily homes experiencing a substantial drop. This decrease is the largest seen in four years and is attributed to rising mortgage rates affecting housing activity.
According to data released by the Census Bureau on Tuesday, housing starts fell 14.7% month-over-month in March, plummeting from a pace of 1.55 million units annually to 1.32 million units annually. Specifically, single-family starts decreased by 12.4% during this period.
Economists, such as Jeffrey Roach from LPL Financial, are noting that the data reflects a slowing pace of growth in new home construction. Roach emphasized that potential homebuyers are indicating it is not an ideal time to purchase a home, hinting at a forthcoming slowdown. He also mentioned that residential investment may become a drag on GDP growth in the upcoming quarters until the Federal Reserve initiates an easing cycle.
The recent statistics follow a period where builder sentiment in April remained unchanged from the previous month, breaking a streak of four months of gains. The National Association of Home Builders (NAHB) mentioned that buyers are hesitant due to uncertainty surrounding the direction of interest rates.
Looking forward, Thomas Ryan, a property economist at Capital Economics, expressed optimism for single-family starts due to a shortage of existing homes on the market, which may drive demand towards new construction. However, Ryan also highlighted a potential weakness in multifamily starts, projecting that total housing starts may not significantly increase by the end of the year.
Market reactions to the news were observed as the SPDR S&P Homebuilders ETF (XHB) traded lower by more than 1% on Tuesday morning. This decline reflects investors’ concerns about the housing market’s future performance in light of the recent data on new residential construction.
These latest developments are painting a complex picture of the housing market, suggesting a possible shift in trends that could impact both buyers and investors in the coming months.