Housing Permit Activity Stalls Amid High Interest Rates

The housing U.S. market showed flat to slightly down prospects in data provided by FRED, the Federal Reserve Bank of St. Louis, for April building permit applications for single-family homes at an annual rate of 923,000.

Building permit statistics are an indicator of the near-term future and help project lumber demand. The April number was a slight decline, and near the median of the range through April in 2025.

Much of this is influenced by the prevailing 30-year mortgage interest rate, which was 6.84% in mid-June, according to FRED, significantly higher than three years ago.

The multi-family building permit applications are similarly flat nationally, running at an average annual rate of 438,000, near the median for the last decade.

Some analysts believe that high rates combined with an absence of smaller houses on the market have had a tendency to lock up the housing market. Smaller homes are good starter homes for younger couples forming a family. But they can also be attractive to baby boomers at retirement age as their children transition to their own apartments. Builders often find it difficult to construct small homes at a profit, due to land and supply costs and permitting delays.

The National Association of Homebuilders/Wells Fargo homebuilders confidence index reflected a low level of enthusiasm in May, dropping from 40 (on a scale of 0 to 100) to 34.