Housing Starts Increase in June but Supply-Side Issues Linger
Overall housing starts increased 6.3 percent in June to a seasonally adjusted annual rate of 1.64 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Despite the increase in housing production, there is concern over weakening permit numbers for both the single-family and multifamily markets.
The June reading of 1.64 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 6.3 percent to a 1.16 million seasonally adjusted annual rate. The multifamily sector, which includes apartment buildings and condos, increased 6.2 percent to a 483,000 pace.
“While lumber prices have just recently begun to trend downward, builders continue to deal with rising prices of other building materials, such as oriented strand board, and major delays in the delivery of these goods,” said Chuck Fowke, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Tampa, Fla. “We are thankful that the White House recently held a meeting to seek solutions to these supply chain issues that are harming housing affordability.”
“The recent weakening of single-family and multifamily permits is due to higher material costs, which have pushed new home prices higher since the end of last year,” said NAHB Chief Economist Robert Dietz. “This is a challenge for a housing market that needs additional inventory.”
On a regional and year-to-date basis (January through June of 2021 compared to that same time frame a year ago), combined single-family and multifamily starts are 41.4 percent higher in the Northeast, 25.5 percent higher in the Midwest, 21.5 percent higher in the South and 28.0 percent higher in the West.
Overall permits decreased 5.1 percent to a 1.60 million unit annualized rate in June. Single-family permits decreased 6.3 percent to a 1.06 million unit rate. Multifamily permits decreased 2.6 percent to a 535,000 pace.
Looking at regional permit data on a year-to-date basis, permits are 33.2 percent higher in the Northeast, 31.9 percent higher in the Midwest, 29.6 percent higher in the South and 32.2 percent higher in the West.
The count of single-family homes currently under construction is 675,000—up 32 percent compared to a year ago. The number of multifamily units under construction is up 2 percent to 684,000 apartments.