The hopium about interest rate declines didn’t pay off in March. Housing starts fell despite declining interest rates.
(Bloomberg) — U.S. new-home construction unexpectedly fell in March, decelerating to the slowest pace since May 2017 and suggesting builders remain wary even as lower mortgage rates and steady wage gains offer support to consumers.
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Residential starts fell 0.3 percent to a 1.139 million annualized rate after a downwardly revised 1.142 million pace in the prior month, according to government figures released Friday. Permits, a proxy for future construction, slumped 1.7 percent to a 1.27 million rate. Both figures missed estimates.
1-unit starts fell -0.38% in March while 5+ unit (apartment) starts fell -3.44%. The Midwest was the biggest loser at -17.61%. The biggest winner was … the West at 31.40%.
The decline in 10 year Treasury rates (yellow line) provided a nice pop in 1-unit start in January, but nada in February and Match (white line). Apartment starts (blue line) have slowed.
So pushing interest rates down has not paid off as expected.