Strong starts, weakening outlook

April 29, 2026

Housing starts, another name for new home construction, jumped 10.8% in March after slipping in February, with data for both months released simultaneously as a catch-up following the late-2025 government shutdown. Construction activity strengthened across all regions.

Mortgage rates dipped below 6% in late February, briefly reigniting demand, with refinancing activity hitting levels not seen since March 2022, when the Fed first began hiking. But as the war in Iran unfolded through March, rates reversed course sharply, with the 30-year fixed reaching its highest level since September by early April. Purchase applications edged up during the window of lower rates but remain well below pandemic-era levels. 

Single-family starts crossed the one-million-unit threshold in March for the first time in over a year, running 8.9% above year-ago levels, with all regions posting gains. The structural housing shortage across much of the country continues to underpin demand even in a higher-rate environment, but rising rates and geopolitical uncertainty are keeping would-be buyers on the sidelines. The spring buying season is off to a weak start.

Multifamily permits grew 9.6% in March and were 13.5% above a year ago, signaling a gradual pivot back toward apartment construction. Years of record completions have pushed rents lower and cooled builder appetite for multifamily, but firm household formation and the affordability barrier to homeownership are keeping a floor under absorption.

Housing permits plunged 10.8% in March after surging 11% in February, with both single- and multifamily permits declining across every region. Since permits lead construction activity, this pullback is a meaningful warning sign for the months ahead.

Home builder sentiment plunged in April after gaining a bit of momentum in March. Home builders are increasingly pessimistic about future sales expectations while current sales conditions have deteriorated. According to the National Association of Home Builders, over a third of builders cut prices in April and 60% used some sort of sales incentive.