March surge masked weaker permits, soft confidence and stubborn affordability pressures
US homebuilders ended the first quarter on a surprisingly strong note, pushing single-family housing starts to their highest level in more than a year even as forward-looking indicators pointed to renewed caution.
Government data showed that single-family housing starts jumped 9.7% in March to a seasonally adjusted annual rate of about 1.03 million units, the strongest pace since February 2025.
Overall residential starts climbed 10.8% to roughly 1.5 million units on both a monthly and annual basis, the highest since December 2024.
Beneath the March spike, the signals for future activity were weaker. Single-family permits fell 3.8% from February to an annualized rate of around 895,000, while overall permits dropped 10.8% to roughly 1.37 million, the lowest level since last August.
On a year-over-year basis, single-family permits were down 7.9% and total permits were 7.4% lower.
Those headwinds have been building. Before the recent conflict in Iran, homebuilding was already under pressure from tariffs on imported materials such as lumber and cabinetry. The war added a fresh layer of volatility, driving up fuel and transport costs and reversing a brief downward trend in mortgage rates.
The popular 30-year fixed rate, which has been hovering below 6% in late February, moved back above 6.2% in April after briefly touching 6.46%, according to Freddie Mac data.
Builder confidence, however, remains subdued. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index dropped to 34 in April, its lowest level in months, after sitting below the neutral 50 mark for most of 2025 and early 2026 as affordability and construction costs weighed on demand.
Moreover, analysts at Barclays cautioned that “eventual inflation in development costs — pipe, freight, and infrastructure facing new inflationary dynamics — will be difficult for builders to pass on, leading to further margin challenges and/or more reduction in starts.”
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