U.S. Housing Starts Unexpectedly Rise In March; Building Permits Increase

•  U.S. homebuilding unexpectedly rose in March, but starts for single-family housing tumbled amid rising mortgage rates. Housing starts increased 0.3% to a seasonally adjusted annual rate of 1.793Mn units last month, the Commerce Department said on Tuesday. Data for February was revised higher to a rate of 1.788Mn units from the previously reported 1.769Mn units. 
• The 30-year fixed-rate mortgage averaged 5.0% during the week ended April 14, the highest since February 2011, up from 4.72% in the prior week, according to data from mortgage finance agency Freddie Mac. Further increases are likely with the Federal Reserve adopting an aggressive monetary policy posture as it battles sky-high inflation. 
• The Fed in March raised its policy interest rate by 25 basis points, the first hike in more than three years. Economists expect the U.S. central bank will hike rates by 50 basis points next month, and soon start trimming its asset portfolio. 
• Rising borrowing costs are combining with higher home prices to reduce housing affordability for first-time buyers. The National Association of Home Builders/Wells Fargo Housing Market index dropped to a seven-month low in April, with builders blaming the “jump in mortgage rates and persistent supply chain disruptions.” 
• Still, record low housing supply should continue to underpin homebuilding this year. There is a record backlog of houses approved for construction that are yet to be started.

(Source: CNBC News)