The construction of new homes fell in March to 1.321 million. That's down 14.7% from the revised February data and was the largest monthly decline since the start of the pandemic. The news sent homebuilder stocks lower, but it doesn't necessarily mean bad news for the sector.

Yahoo Finance's Dani Romero explains why in the video above.

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This post was written by Stephanie Mikulich.

Video Transcript

BRAD SMITH: Housing starts fell 14.7% on a monthly basis. This comes as homebuilder confidence came in flat in April amid rising mortgage rates. For more on what this means for prospective buyers and the new homes market, let's bring in Yahoo Finance's reporter Dani Romero joining us now. Hey, Dani.

DANI ROMERO: Brad, the new home market still stands to benefit from the lack of homes in the resale market. March's housing starts were down, falling by the largest monthly amount since April 2020, and single family starts were another big miss, down 12% on a monthly basis, but are up 21% on a yearly basis. Now homebuilder stocks are down this morning. But is this really bad news for the publicly traded homebuilders? Hmm, not necessarily. We still need more homes.

Builders have been able to offer incentives like those mortgage rate buydowns. That's when the builder upfronts the cost to lower the rate on the loan, and some buyers are getting about a 5% mortgage rate by using their programs. Other builders are slashing home prices. The median price on a new home in February was about $400,000, and that's down from 3.5% in January and 7.6% lower compared to a year ago. So overall, experts are expecting the new home market to continue to outperform the resale market, Brad.

DANI ROMERO: All right, Dani, thanks so much.