Housing Market Reacts to Rising Interest Rates | Episode 122 | 04-16-2024

In this episode, Megan discusses the latest economic data impacting the housing market. Despite hopes of stabilization, higher interest rates are once again disrupting the housing sector. There has been a significant 14.7% drop in housing starts—the largest since April 2020—in both single and multifamily housing units. There has also been a 4.3% decline in building permits, especially for single-family homes, raising concerns for future construction. With mortgage rates exceeding 7% for two consecutive months, there are mounting challenges facing the housing market. Stay connected for more market updates and analysis from Megan and the team at Verdence Capital Advisors.

Just as we thought we were making some progress or finding a bottom here in housing, higher interest rates are starting to wreak havoc again in the housing market. This is Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors. We're coming to you today it is Tuesday, April the 16th with our regular segment of Markets with Megan and we want to discuss the economic data we got today on the housing market. Primarily, this was the data on housing starts and building permits. Housing starts was just a huge miss when you look from what the expectation was. It was for a modest decline in the month, but actually housing starts dropped 14.7%. That is the biggest monthly drop we've seen since the pandemic, since April of 2020. Monthly drop we've seen since the pandemic, since April of 2020.

The declines were primarily in the multifamily sector, which is not that bad when we look big picture and we have to do that with economic data because we do have an overhang of some multifamily housing units but there was also a 12% drop in the single- family homes and that's what we need the inventory in order to get this tightness in housing to recover. Now. Permits is a leading indicator for future construction and this was disappointing as well. It fell 4.3% and the expectation was for it to only marginally drop by less than a percent. The biggest drop was in the single family. So again, that's a little bit concerning, because we have this housing shortage. We need to build homes for single families.

The multifamily also declined, but that is you know. The single- family is the one that concerns us and what we're seeing is the mortgage rate has been hovering over 7% for the past basically two months and it's starting to have an impact back on the housing market. We'll get some more housing data this week that we will be back to report on. That's all we have today. If you have any questions or comments, please feel free to reach out to podcasts at verdence dot com. Thank you.