Higher Interest Rates Keep Single-Family Housing Starts Flat in April

Single-family starts remained flat in April as interest rates moved above 7% last month and builders were dealing with tighter lending conditions.

Overall housing starts increased 5.7% in April to a seasonally adjusted annual rate of 1.36 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The April reading of 1.36 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 0.4% to a 1.03 million seasonally adjusted annual rate. However, this pace is 17.7% higher than a year ago. On a year-to-date basis, single-family starts are up 25.7%, totaling 335,600. The multifamily sector, which includes apartment buildings and condos, increased 30.6% to an annualized 329,000 pace.

“While the start of the year has seen an expansion for single-family home building because of a lack of existing home inventory, home building activity leveled off in April as higher interest rates, tighter lending conditions and lower home building sentiment acted as headwinds on new home construction,” said Carl Harris, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Wichita, Kan. “Lower interest rates, particularly for builder and developer loans, will help builders to increase the pace of home construction in the months ahead.”

“Moving forward, the multifamily market will see additional declines for construction volume, while the pace of completions remains elevated,” said NAHB Chief Economist Robert Dietz. “April marked the fifth consecutive month for which the seasonally adjusted rate of multifamily completions was above 500,000. This additional rental supply will help lower shelter inflation, which is the last leg of the inflation policy challenge.”

On a regional and year-to-date basis, combined single-family and multifamily starts are 24.5% lower in the Northeast, 11.0% higher in the Midwest, 1.8% higher in the South and 8.4% higher in the West.

Overall permits decreased 3.0% to a 1.44 million unit annualized rate in April. Single-family permits decreased 0.8% to a 976,000 unit rate; this is the lowest pace since August 2023. Multifamily permits decreased 7.4% to an annualized 464,000 pace.

Looking at regional data on a year-to-date basis, permits are 9.3% higher in the Northeast, 8.5% higher in the Midwest, 2.8% higher in the South and 0.2% higher in the West.

After peaking in July 2023 at 1.02 million apartments under construction, active multifamily units under construction is declining quickly—down to 934,000 in April.

Editor’s Note: Census and HUD noted there have been revisions to the data:
Notice of Revision: With this release, unadjusted estimates of housing units authorized by building permits for January 2022 through December 2023 have been revised. Also, seasonally adjusted estimates of housing units authorized by building permits have been revised back to January 2017, and seasonally adjusted estimates of housing units authorized but not started, started, under construction, and completed have been revised back to January 2019. All revised estimates are available on our website.