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 percent 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 percent 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 percent. The multifamily sector, which includes apartment buildings and condos, increased 30.8 percent to a 501,000 pace.
“Builder confidence remains strong, pointing to gains for single-family construction in 2021,” said Chuck Fowke, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Tampa, Fla. “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 64.0 percent higher in the Northeast, 122.8 percent higher in the Midwest, 13.5 percent higher in the South and 13.6 percent lower in the West. The gain in the Midwest is likely weather-related.
Overall permits increased 2.7 percent to a 1.77 million unit annualized rate in March. Single-family permits increased 4.6 percent to a 1.20 million unit rate. Multifamily permits decreased 1.2 percent to a 567,000 pace.
Looking at regional permit data compared to the previous month, permits are 8.0 percent lower in the Northeast, 2.0 percent higher in the Midwest and 6.4 percent higher in the South. Permits held steady in the West.