Building permits and housing starts numbers were lower than expected but may not necessarily indicate decreasing home prices in the future. Building permits dropped to 1.819 million in April from 1.879 million in March.
The drop increases concerns that growth in the housing market is cooling. Housing starts were also down for the month at 1.724 million, versus the previous month’s 1.728 million. The decline may be a factor of builders slowing down and completing the work they have started. Backlogs in home construction are historically high.
Increasing prices and lack of availability of materials has put additional pressures on homebuilders. The slowing rate of permits is not necessarily indicative of slowing demand in housing.
The expectation is for first-time home buyers to feel a pricing squeeze as supply continues to lag demand.