The once-red hot U.S. housing market is cooling off as rising mortgage rates and surging materials costs take a toll.
Housing starts and building permits both fell by more than expected in February, according to a report released Wednesday by the Commerce Department. The bad news comes a day after a survey found homebuilder confidence fell to a seven-month low in March.
HOMEBUYERS CANCELING CONTRACTS AS COSTS SOAR
Housing, which has been the standout sector in the economy amid the COVID-19 pandemic, accounts for about 15% to 20% of the country’s gross domestic product, according to the National Association of Realtors.
“The peak in housing is in,” wrote David Rosenberg, chief economist and strategist at Toronto-based Rosenberg Research. He argues the level of the data isn’t as important as the direction and momentum, which has been in decline amid a sharp rise in mortgage rates and lumber prices.