Big Decline in March 2024 Housing Starts in the US: Rise in Mortgage Rates Negatively Impacts Construction Industry
In March 2024, housing starts in the US fell by 14.7% m-o-m to 1.321 million. The impact of rising mortgage rates on the construction sector and regional differences are examined in detail.
Housing starts in the US fell sharply to 1.321 million on an annualized basis in March 2024, down from 1.48 million in February. This decline was recorded at 14.7% yoy, well below market expectations of 1.48 million. These figures, which are the lowest since August, reveal the negative pressure of the increase in mortgage rates on potential buyers. With the biggest drop since April 2020, the sense of uneasiness in the sector is increasing.
Regional Differences in the Housing Sector
The decline in housing starts also varied regionally. The Northeast experienced the largest decline with a 36% drop, with housing starts in this region falling to 80,000. In the Midwest, housing starts fell by 23% to 157 thousand and in the South by 17.8% to 736 thousand. On the other hand, the West region was an exception to the general downward trend, rising by 7.1% to 348,000 housing starts.
Detached Houses and Multi-Unit Buildings
Single-family housing starts also fell by 12.4% to 1.022 million in March. Starts in multi-unit buildings, i.e. buildings with five or more units, fell by 20.8% to 290,000. These declines indicate that especially high mortgage rates are making it difficult for new projects to start and slowing down existing projects.
Effects of the Increase in Mortgage Rates
The recent increase in mortgage rates continues to have a negative impact on the housing market. High financing costs are putting pressure on both developers and potential home buyers, causing new starts and projects to be postponed.
