The U.S. housing market is taking a beating, and the latest numbers are worse than expected.
May’s data on new home construction and building permits shows a sharp decline, continuing a worrying trend.
Housing starts fell 5.5% in May compared to April, while building permits dropped 3.8%.
This marks the third month in a row that permits have decreased, signaling trouble ahead for the construction industry.
To make matters worse, April’s numbers were revised downward, painting an even gloomier picture.
'Housing starts decreased 5.5% to a 1.28 million annualized rate last month. Building permits, which point to future construction, fell 3.8% to a 1.39 million annual rate, also the weakest since June 2020.' https://t.co/emUPUjBGrM pic.twitter.com/zinfQW9nWc
— Jesse Felder (@jessefelder) June 20, 2024
Both housing starts and permits have now sunk to levels not seen since the COVID-19 pandemic’s lowest point.
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The situation is particularly dire for apartment buildings and condos, where construction has nearly dropped to lockdown-era lows.
Single-family home construction also dipped below a key threshold for the first time in months.
These disappointing figures can be traced back to the Federal Reserve’s aggressive interest rate hikes and the Biden administration’s economic policies, dubbed “Bidenomics.”
High borrowing costs are making it tough for people to buy homes, which in turn is reducing demand for new construction.
With interest rates expected to stay high, there’s little hope for a quick turnaround in the housing market.
Homebuilders are starting to face this harsh reality.
Housing construction continued its 2024 decline, with permits and starts declining for both single-family and multifamily housing units.
Permits and starts continued their underlying trajectories with both single-family (SF) and multifamily (MF) still in steady downtrends.
The… pic.twitter.com/usCXiPBzpI
— Parker Ross (@Econ_Parker) June 20, 2024
Oddly enough, while home construction is plummeting, the government reports that construction jobs are at record highs.
This mismatch raises eyebrows about the accuracy of the employment data being reported.
The housing market’s struggles highlight broader economic challenges facing the country.
It’s clear that current policies aren’t doing enough to support this crucial sector of the economy.
As we move forward, all eyes will be on whether any future changes in interest rates can jumpstart the housing market.
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For now, the outlook remains uncertain, leaving many to wonder if this downturn is just a bump in the road or a sign of deeper problems in the U.S. housing market.
