Yahoo Finance Housing starts are up, but 'you don’t want to overreact to it': economist
U.S. homebuilding increased more than expected last month as declining mortgage rates started to lift the housing market.
Housing starts rose to an adjusted annual rate of 1.235 million units in April, up 5.7% from the previous month, the U.S. Commerce Department said Thursday. Starts for March were also revised up to 1.168 million units, instead of falling to a rate of 1.139 million units.
“Housing starts popped back up after declining for several months so that is an encouraging sign,” said LendingTree Chief Economist Tendayi Kapfidze, but “these numbers [starts] are very volatile. So, any kind of one-month data doesn’t really tell you that much, you don’t want to overreact to it. You really want to look at the trends.”
“Ultimately, one of the things we’re facing in the market is this lack of supply, which is related to big macro issues,” he said.
The lack of inventory has been putting pressure on the housing market and causing home prices to increase. Labor costs and tariffs are putting pressure on homebuilding, according to Kapfidze.
“Unfortunately, the trends, pretty much since the financial crisis, has been that we’re not building enough homes,” he said. “And that is what has led to this affordability problem where we’ve had three times the rate of home price increases compared to income increases. It’s still a challenging market for a lot of buyers, particularly at the lower price points.”
The ‘right’ time to buy
It’s always difficult to gauge the housing market so Kapfidze said people should decide to buy a home when they’re ready.
“It’s always a good time [to buy]. It depends on your own personal circumstance. I never go for blanket statements around it’s a good time or bad time,” Kapfidze explained. “You need to figure out what it your life plan, and you need to make a buying decision, a lifestyle decision, not necessarily a financial decision. When people try to anticipate what’s going to happen with home prices and interest rates, that’s when people get into trouble. Make a lifestyle decision, and then figure out the financing. That’s the safest way to go.”
Taylor Locke is a producer for Yahoo Finance On the Move.
