Remember last month when new home construction hit the highest pace since June 2006? Scratch that.
In an abrupt reversal from that nearly 15-year high, new single-family home construction fell by 13.4% in the month of April, according to a new report from the Census Bureau and Department of Housing and Urban Development.
The decline nearly erases the 15.3% increase in single-family home starts seen in March. The decline also mirrors the decrease in new single-family home construction in February, meaning construction has now yo-yoed back and forth for several months in a row.
Overall housing starts (which also includes multifamily homes) also decreased by 9.5% from March to April.
As for why the decrease occurred, the National Association of Home Builders cited “increased costs of building materials that have priced out potential home buyers” as the main reason why, a common theme throughout this year.
“Housing starts and permits posted a monthly decline in April, as escalating prices for lumber and other building materials price out some home buyers from an otherwise hot housing market,” said NAHB Chairman Chuck Fowke.
As Fowke noted, permits for new single-family home builds were also down in April, falling 3.8% below March’s figures.
NAHB Chief Economist Robert Dietz says the decline in permits indicates that the increases seen in earlier months may have been a bit of a mirage.
“The decline in single-family permits indicates that builders are slowing construction activity as costs rise,” Dietz said. “While housing starts were strong at the beginning of the year, due to home builders constructing homes that were sold pre-construction, higher costs and limited availability of building materials have now paused some projects.”