US housing starts jump in April amid lower mortgage rates

The U.S. housing market just received some much needed positive news.

Housing starts rose 5.7 percent in April, compared to March, to an adjusted annual rate of 1.24 million, according to data from the U.S. Census Bureau released on Thursday. This number includes both multifamily and single-family homes.

The news comes after numerous economic indicators have shown that the housing market is slowing down. Last month, single-family housing starts fell 0.4 percent to 781,000, the slowest pace since September 2016.

April’s numbers indicate that homebuilders could be back to constructing new homes due to lower mortgage rates. The 30-year fixed rate mortgage declined to 4.10 percent in April from a high of about 4.94 percent in November. Lower mortgage rates make home buying more affordable for buyers.

Building permits, an indicator for future new construction, also rose 0.6 percent to a seasonally adjusted rate of 1.3 million, the newly released data shows. But single-family housing permits fell, marking the fifth consecutive month of declines, suggesting there will be less new construction in coming months.

Affordability is one of the biggest challenges facing homebuilders. Buyers are unable to afford to buy homes in many metro areas such as Miami, New York and Los Angeles, while homebuilders are having a tougher time constructing less expensive homes due to rising labor and supply costs.

These pressures have caused many economists to wonder whether the post-recession housing boom is coming to an end. One indicator: the pace of home price growth of existing homes is slowing in many cities.

In Miami, about 88 percent of single-family homes were purchased after the seller lowered the price, according to the housing startup Knock. In Chicago, 82 percent of homes sold at a discount from the initial asking, while in New York, 77 percent of homes sold at a price reduction.