WASHINGTON, (Reuters) – Despite unexpectedly rising homebuilding in the United States, single-family housing starts fell amid rising mortgage rates.

According to the Commerce Department, housing starts rose 0.3% last month to an adjusted seasonally adjusted annual rate at 1.793million units. From 1.769 Million units previously reported, February’s data were revised to an estimate of 1.788 millions units.

Reuters polled economic experts and predicted starts falling to 1.745M units. Last month, permits for future homebuilding rose 0.4% to a rate at 1.873 Million units.

According to data from the mortgage finance agency, the average 30-year fixed rate mortgage was 5.0% in week ending April 14. This is higher than the 4.72% recorded the previous week. Freddie Mac (OTC:). As it fights high inflation, further increases will be possible as the Federal Reserve takes an aggressive monetary policy position.

The Fed increased its policy interest rates by 25 basis point in March. It was their first major hike in three years. According to economists, the U.S. central banks will raise rates 50 basis points in March and begin trimming its assets portfolio soon.

In combination with rising home prices, increasing borrowing costs have made it harder for first-time buyers to purchase housing. According to the National Association of Home Builders/Wells Fargo Housing Market indicator, April saw a 7-month drop. Builders attribute this decline to “the rise in mortgage rates and ongoing supply chain disruptions.”

However, the record low supply of housing should still be a major factor in homebuilding for this year. The record-breaking backlog of homes that have been approved for construction is still to be built.

Goldman Sachs (NYSE 🙂 predicts that the number of housing starts will rise 5% to 1.7 Million this year. They argue that when housing markets are tight like today, homebuilders will likely keep building, because there should be little concern that their homes might sit empty after they have been completed.

The largest share of homebuilding was done by single-family homes, and they fell 1.7% to 1.200,000,000 units in March.