Single-family homebuilding and permits in the United States fell in March, as mortgage rates rose.

At the same time residential development remained hampered by a severe housing scarcity, according to a report from the US Commerce Department. It came on the heels of news today that single-family homebuilder morale fell to a seven-month low in April.

The Commerce Department report revealed a record backlog of houses approved for building but not yet begun. The 30-year fixed mortgage rate has increased above five per cent for the first time in more than a decade, as the Federal Reserve raises borrowing rates to combat skyrocketing inflation.

The housing market is the most sensitive sector of the economy to interest rate changes. “A lack of existing inventories should be positive for building activity,” explained Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York.

According to him, “high input costs and shortages of both labor and materials remain headwinds for builders. Rising mortgage rates that crimp demand will also be a consideration for building activity going forward.”

Permits for construction

In March, the seasonally adjusted annual rate of privately-owned housing units permitted by building permits amounted to 1,873,000. This is 0.4 percentage points higher than the revised February rate of 1,865,000 and 6.7 percentage points higher than the March 2021 rate of 1,755,000.

Single-family authorizations were 1,147,000 in March, 4.8 per cent lower than the revised February total of 1,205,000. In March, there were 672,000 authorizations for units in buildings with five or more units.

Housing starts

In March, private-owned home starts were at a seasonally adjusted annual pace of 1,793,000. This is 0.3 per cent higher than the revised February estimate of 1,788,000 and 3.9 per cent higher than the March 2021 rate of 1,725,000.

The rate of single-family dwelling starts in March was 1,200,000, which is 1.7 per cent lower than the revised February number of 1,221,000. The rate for units in buildings with five or more units in March was 574,000.

Completion of housing

Privately-owned home completions reached a seasonally adjusted annual pace of 1,303,000 in March. This is 4.5 per cent less than the revised February projection of 1,365,000 and 13.0 per cent less than the March 2021 rate of 1,497,000.

The rate of single-family dwelling completions in March was 1,000,000, which is 6.4 per cent lower than the revised February rate of 1,068,000. The rate for units in buildings with five or more units in March was 292,000.