WASHINGTON, DC — Rising interest rates and ongoing building material supply chain disruptions that raise construction costs “continue to act as significant headwinds on the housing market,” according to the National Association of Home Builders.
The Washington, DC-based NAHB, citing data from the U.S. Dept. of Housing and Urban Development and the Census Bureau, reported this week that overall housing starts fell 14.4% to a seasonally adjusted annual rate of 1.55 million units in May, from an upwardly revised reading the previous month. Within that overall number, single-family starts decreased 9.2%, to a 1.05 million seasonally adjusted annual rate, while the multifamily sector declined 23.7%, to an annualized 498,000 pace.
In further signs that the housing market is weakening, single-family permits were down 2.5% on a year-to-date basis, while home builder confidence has declined for the last six months,” the NAHB said.
“Single-family home building is slowing as the impacts of higher interest rates reduce housing affordability,” said NAHB chairman Jerry Konter, adding that construction costs continue to rise, with residential construction materials up 19% from a year ago.
“As the market weakens due to cyclical factors, the long-term housing deficit will persist and continue to frustrate prospective renters and home buyers,” Konter said.