Housing Starts Spring Forward in March
Housing production rebounded in March as buyer demand remains solid due to low mortgage interest rates. Overall housing starts increased 19.4% to a seasonally adjusted annual rate of 1.74 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This was the fastest pace for combined single-family and multifamily construction since June 2006.
The March reading of 1.74 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts increased 15.3% to a 1.24 million seasonally adjusted annual rate.
When comparing the first quarter of 2021 to the first quarter of 2020, single-family starts are up 19.6%. The multifamily sector, which includes apartment buildings and condos, increased 30.8% to a 501,000 pace.
“Builder confidence remains strong, pointing to gains for single-family construction in 2021," said NAHB Chairman Chuck Fowke. “However, rising costs for most kinds of building materials continue to impede positive additional momentum in the market.”
“Demand remains solid due to low mortgage interest rates and a thin level of inventory in the resale market, which is spurring the need for additional supply,” said NAHB Chief Economist Robert Dietz. “The test for the industry this year will be balancing growth and higher construction costs, given ongoing housing affordability challenges.”
On a regional basis compared to the previous month, combined single-family and multifamily starts are 64% higher in the Northeast, 122.8% higher in the Midwest, 13.5% higher in the South and 13.6% lower in the West. The gain in the Midwest is likely weather-related.
Overall permits increased 2.7% to a 1.77 million unit annualized rate in March. Single-family permits increased 4.6% to a 1.2 million unit rate. Multifamily permits decreased 1.2% to a 567,000 pace. Looking at regional permit data compared to the previous month, permits are 8% lower in the Northeast, 2% higher in the Midwest and 6.4% in the South. Permits held steady in the West.