Construction of new homes increased last month, despite a surge in mortgage rates, according to new data released today from the U.S. Census Bureau and U.S Department of Housing and Urban Development.
According to the new data, housing starts increased to a seasonally adjusted rate of 1.79 million, a 0.3% increase over the previous month and up just under 4% YoY. Here are the numbers:
Privately‐owned housing starts in March were at a seasonally adjusted annual rate of 1,793,000. This is 0.3% above the revised February estimate of 1,788,000 and is 3.9% above the March 2021 rate of 1,725,000. Single‐family housing starts in March were at a rate of 1,200,000; this is 1.7% below the revised February figure of 1,221,000. The March rate for units in buildings with five units or more was 574,000.
Privately‐owned housing completions in March were at a seasonally adjusted annual rate of 1,303,000. This is 4.5% below the revised February estimate of 1,365,000 and is 13.0 below the March 2021 rate of 1,497,000. Single‐family housing completions in March were at a rate of 1,000,000; this is 6.4% below the revised February rate of 1,068,000. The March rate for units in buildings with five units or more was 292,000.
Privately‐owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,873,000. This is 0.4% above the revised February rate of 1,865,000 and is 6.7% above the March 2021 rate of 1,755,000. Single‐family authorizations in March were at a rate of 1,147,000; this is 4.8% below
the revised February figure of 1,205,000. Authorizations of units in buildings with five units or more were at a rate of 672,000 in March.
“New residential construction is working through shifting cross-winds that are impacting the economy and real estate markets, with the pace of permits and starts picking up on the strength of multifamily projects,” said George Ratiu, senior economist and manager of economic research at realtor.com®. “Construction companies are casting a wary eye on the Federal Reserve as it tightens the monetary spigot in an effort to tame fast-running inflation. With rising prices and interest rates clamping buyer traffic and current sales, the NAHB Market Index for April showed the fourth consecutive month of declining builder sentiment. However, data highlight interesting undercurrents that signal favorable developments. Builders in the Northeast and South saw conditions improve during the month, and the six-month outlook for new single-family home sales increased. With lumber costs trending down since early March, from about $1,300 to $890 per thousand board feet, construction companies continue to bet that market demand will remain viable. To that end, builders hired more than 100,000 construction workers over the past 12 months.
“The imbalance between solid demand and insufficient supply is a principal cause for today’s record-high real estate prices,” Ratiu continued. “Following over a decade of underbuilding, communities across the country are seeing the one-two punch of rising rents and for-sale home prices, up 17% and 13.5% respectively in March. Combined with surging interest rates, which are pushing typical mortgage payments 44% higher than a year ago, families are left stuck between a proverbial rock and hard place. The Federal Reserve is committed to tightening the money supply in order to corral demand and prevent further overheating in real estate prices. Invariably, this effort will impact buyers and builders as they face higher borrowing rates and a shortage of 5.8 million new homes relative to the 13 million new households formed during the past decade. We are not going to build our way out of this housing crisis in the next couple of years, but we can take more steps toward leveraging public regulatory policies, emerging technologies and private efforts to make homes more affordable.”