New housing starts surged 15% in March to an annualized rate of 1.65 million units, the highest level in 18 months, as builders respond to renewed buyer demand and lower lumber costs.

What's Driving Construction

Lower mortgage rates have unleashed pent-up demand while lumber prices have fallen 30% from their 2025 peaks. Builder confidence has reached its highest level since 2022.

Inventory Relief

The surge in construction could help alleviate the housing shortage estimated at 4-5 million units. However, analysts note it will take years of elevated construction to fully close the gap.