Housing starts in the U.S. rose in April, the latest sign that the residential real estate market may be stabilizing after being dragged down over the past year by a steep rise in mortgage rates.
Housing starts, which mark the beginning of new home building, rose 2.2 percent in April to a seasonally adjusted annual rate of 1.401 million, the Commerce Department said Wednesday.
The rise was unexpected. Economists had forecast starts to decrease 1.4 percent to 140 million after the preliminary estimate for March of 1.42 million. The prior month was revised down sharply to 1,371, indicating a sharper downturn than had been apparent.
Housing starts are 22.3 percent below the April 2022 level.
Sentiment among home builders rose in May for the fifth straight month, the National Association of Home Builders said Tuesday. The market for new homes has been bolstered by the reluctance of homeowners to sell existing homes that have locked-in low interest-rate mortgages financed during the pandemic and its aftermath.
The increase in April was driven by multi-family projects. These rose 5.2 percent. Single-family starts increased 1.6 percent.
Despite the slightly better-than-expected figure for starts, residential permits fell 1.5 percent. These are a leading indicator of future construction. Forecasters expected permits to rise in April.
Single-family starts surged 59.5 percent in the West but declined across the rest of the U.S.
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