Geoffrey Smith

Investing.com — U.S. Housing Starts fell in April, however, they remained high despite rising signs that increasing mortgage rates and higher prices are reducing affordability.

The figure fell to 1.724m last month, which was below analyst expectations. The March figures were also revised downwards to 1.728million, a decrease from the initial estimates of 1.793million.

Even though the level is slightly lower, construction continues at an unprecedented rate since the subprime boom of 15 years ago.

The overall numbers showed a significant divergence between multi-unit and single-family construction. However, it was clear that the trend for the former was weaker than the latter. It is clear that there are still many potential buyers who prefer to rent homes rather than buy them. The monthly starts of single-family homes fell 7.3% and are currently up 3.7% on the calendar year. However, starts for larger projects (more than 5 units) were up 16.8% and 42.3% respectively from March 2021.

The more optimistic indicator of activity in the housing market, remained stable in April absolute terms, even though it fell to an all-time low of 1.819million in April. Although it was slightly less than March’s 1.879million, it still exceeded expectations.

This comes against the background of rising long-term interest rates. While the benchmark MBA interest rate dropped to 5.49%, from 5.53% last Wednesday, it remains higher than the previous year by more than 2 percentage points.