U.S. new home construction fell 30.2% in April amid the spread of COVID-19 to a seasonally adjusted annual rate of 891,000 units—the lowest level since early 2015, according to www.cnbc.com. Economists had expected housing starts to fall to a pace of 927,000 units.
Single-family starts fell 25.4% to 650,000 units, and multifamily starts decreased 40.5% to a rate of 241,000 units. Building permits fell 20.8% to a 1.074 million annualized rate.
Economists expect the housing market downturn, along with a collapse in consumer spending, business investment and manufacturing, could result in gross domestic product shrinking at a 40% pace during the second quarter—the deepest since the 1930s.
Still, as the U.S. gradually reopens, there are signs the worst of the homebuilding slump is likely over; a May 18 survey showed an increase in homebuilder confidence in May. However, at least 21.4 million people have lost their jobs during the past couple of months, and the housing market could remain subdued for a while, even with mortgage rates near record lows.
