This week April’s new home construction report was released and it fell 3.7%. That top line number likely worried some but in fact it is not something that should affect anyone. In fact the market shrugged it off the day it came out.
The reason it is not a worrisome number is because it came after a peak in March, which was an 11 year high, at 1.34 million to April’s 1.29 million. Almost all the fall was in the multi-family category which is normally volatile on a month-to-month basis.
More importantly permits which also fell, though to a much smaller degree, are still very good at 1.35 million annual units.
What to watch for is sales, as mortgage interest rates rise the dampening effect will be seen in the monthly sales number for new and existing homes first not in the construction. If builders get nervous you will also see that reflected in the permit numbers. That is a leading economic indicator.