starts ticked up in February despite pressure from high mortgage rates, good news for a market that has seen turmoil the past few years.They are now at a seasonally adjusted annual rate of 1.52 million. From February 2023, they increased by 5.9%.
The housing market was red-hot during much of the pandemic because the Federal Reserve cut interest rates to near-zero levels, causing ultralow mortgage rates for homebuyers. Those historic rates spurred a massive upsurge of demand, causing prices to rise and new construction to skyrocket. Housing starts peaked in April 2022, when they were the highest they had been since 2006, just before the housing market crashed. Since then, they have gradually trended lower as mortgage rates rose.
But now that trend of falling rates has reversed after some inflation reports and other economic indicators that showed that the economy is remaining strong and inflation is proving stickier than previously thought, increasing the odds that the central bank will keep holding rates higher for longer.There is also a unique pandemic-era dynamic at play in the housing market.