US Housing Market in Decline: Building Permits withdrawn in March!
In the US, rising borrowing costs and recession concerns pushed building permits down to a seasonally adjusted annual rate of 1.458 million in March. This decline shows that the downturn in the housing market continues.
Construction activity in the United States experienced an unexpected decline in March. According to data released by the Commerce Department, seasonally adjusted annual building permits fell by 4.3% to 1.458 million in March. This reversed the 2.3% increase observed in February and was below market expectations of 1.514 million. The decline in permits represents the lowest level since July last year, raising concerns that the housing market remains sluggish.
Forces Behind the Decline
A number of factors contributed to the decline in building permits, including rising borrowing costs and general economic uncertainty. Interest rate hikes by the Federal Reserve pushed up mortgage interest rates, limiting the purchasing power of potential homeowners. In addition, rising inflation and geopolitical tensions, such as the war in Ukraine, negatively affected consumer spending and investment appetite.
Regional Differences
The decline in building permits was not felt equally in different regions of the US. Declines in permits in the South (-0.6% to 771,000), Midwest (-14.7% to 197,000) and Northeast (-20.8% to 160,000) were offset by increases in the West (5.1% to 330,000). These regional differences reflect changes in regional economic conditions and housing markets.
Detached Houses Most Affected
The decline also affected different types of housing differently. Single-family housing permits fell 5.7% to 973,000, the lowest level in five months. This suggests that rising construction costs and interest rates have made the construction of single-family homes less attractive. Variable multi-segment permits also fell by 1.2% to 485 thousand.
Future Outlook
The decline in building permits is a worrying sign for the US housing market. Rising borrowing costs and economic uncertainty are expected to weigh on construction activity in the coming months. Experts predict that the housing market will show moderate growth in 2024. However, possible changes in interest rates and construction costs could affect this forecast.
Conclusion
The decline in building permits in the US shows that the stagnation in the housing market continues. Rising borrowing costs and general economic uncertainty are having a negative impact on construction activity. This means challenges for potential homeowners and uncertainty for the housing market.
