Despite High Mortgages, New Home Construction Remains Stable in April

Builders across the country have been busy breaking ground on new homes in April, with a surge in construction activity reported by the Census Bureau and Department of Housing and Urban Development. The latest data revealed that housing starts were at an annual rate of 1.36 million, marking a 5.7% increase from the previous month. However, permits for future construction came in slightly below estimates at 1.44 million.

This uptick in new construction comes as a positive sign for the housing market, which has been buoyed by incentives offered by builders to stimulate sales. Additionally, the availability of more existing homes on the market has provided prospective homeowners with a wider range of options.

Despite the overall positive trend, there are concerns looming on the horizon. Mortgage rates have climbed above 7%, causing some builders to express less confidence in the market. The National Association of Home Builders reported a decline in its monthly confidence index for the first time since November, attributing it to the impact of rising mortgage rates.

However, experts remain optimistic about the resilience of the residential construction sector. Jeffrey Roach, chief economist at LPL Financial, emphasized that years of undersupply and limited inventory are continuing to support the housing market. Meanwhile, Walmart’s strong earnings report, driven by robust online and grocery sales, further underscored the positive momentum in the economy.

As markets remained relatively flat following the news, all eyes are on the housing sector to see how it will continue to shape the broader economic landscape in the coming months.