April Housing Starts Rise As Low Home Inventory Boosts Outlook For New Construction

Housing starts ticked up slightly in April, a sign that demand is growing for newly-built homes in a low-inventory market.

At 1.401 million, privately-owned housing starts for all residential construction in April rose 2.2% from March, but are still down 22.3% from April 2022.

April single-family housing starts came in at 846,000, an increase of 1.6% over the prior month. At the same time, starts for privately-owned buildings with five units or more rose 5.2% in April to 542,000 units, though down 11.7% year-over-year. 

Homebuilding that has been authorized but not yet started increased in April, as well. Single-family units that have been authorized but not yet started increased 4.5% in April over the previous month, but are still down 7.9% from one year ago. 

Between 2012 and 2022 the U.S. was in need of about 6.5 million single-family homes, a recent analysis from Realtor.com found. The rate of household formation is rapidly outpacing the number of new-build single-family homes on the market, making it difficult for would-be homebuyers looking to purchase.

With elevated home prices, high mortgage rates, and low inventory, buyers are turning to newly-built homes. The uptick in housing starts also aligns with an increase in National Association of Home Builders homebuilder confidence data—that reflects builder sentiment about selling newly built homes—released yesterday.

However, strength in housing starts was not universal. Strong gains in some regions helped offset large losses in other areas of the country. Starts for single-family homes in the Northeast fell 10.3% in April, while they fell 6.1% in the South. In the Midwest, single-family starts dropped 20.5% in the month. The West is the only region that posted month-over-month gains in single-family housing starts, with a 59.5% increase.