The construction of single-family homes fell sharply by 14.2% in March, according to U.S. Census Bureau data, reflecting economic pressures such as rising costs and decreased buyer demand. The annual rate dropped to 940,000, the lowest since June 2024. Homebuilders face challenges, including escalated material costs from tariffs, estimated to add approximately $10,900 per home. With mortgage rates averaging 6.65% and many households unable to afford the typical new home price of $414,500, the housing market exhibits signs of strain amidst a significant supply gap of nearly 4 million homes.
The drop in March housing starts is a clear signal that affordability pressures are intensifying, with more than 70% of households unable to afford new homes.
Elevated mortgage rates and rising construction costs are making it increasingly difficult to deliver homes at price points accessible to entry-level buyers.
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