Housing production dipped in April, due, in part, to the rising costs of building materials. Housing starts decreased 9.5% to a seasonally adjusted annual rate of 1.57 million units, according to the latest data from the Commerce Department.
The April reading of 1.57 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 decreased 13.4% to a 1.09 million seasonally adjusted annual rate. The multifamily sector increased 0.8% to a 482,000 pace.
The Breakdown:
Housing Starts:Â 1.57 million (-9.5% month-over-month, +67.3% year-over-year)
Multifamily Starts: 470,000
Single-Family Starts: 1,087,000
Building Permits:Â 1.76 million (+0.3% month-over-month, +60.92% year-over-year)
Multifamily Permits: 559,000
Single-Family Permits: 1,149,000
Completions:Â 1.45 million (-4.4% month-over-month, +21.7% year-over-year)
Multifamily Completions: 401,000
Single-Family Completions: 1,044,000
Regional Year-to-Date Data
Midwest:Â -9.9%
South: +3.9%
West:Â -4.1%
Northeast:Â +8.4%
What the Industry Is Saying:
“Today’s data , showing a decline in housing starts in April, is discouraging at first glance. America is facing an epic housing shortage and more homes need to be built. The monthly data can be volatile, but the overall underlying trend is still on the upside. The year-to-date figures in 2021 for housing starts were 1.59 million units (annualized pace) compared to 1.38 million in 2020—a 15% gain. More importantly, single-family housing starts also declined in the latest month but were up 26% on a year-to-date basis.
“More housing inventory will reach the market in a few months, certainly by autumn, because of the upward trend in home construction. In addition, the mortgage forbearance program will also steadily wind down, leading to further inventory. Moreover, the progress in vaccination among elderly homeowners will lead to normal life activity, including home sales that had been postponed since the onset of the pandemic.
“Housing starts are projected to reach 1.6 million for all of 2021 and rise further to 1.7 million in 2022. This would mark the highest home construction activity in 15 years. It is not an overproduction, but rather an attempt to compensate for multiple years of underproduction that led to the current housing shortage.” — Dr. Lawrence Yun, National Association of REALTORS® Chief Economist
“No matter the construction number, demand is outpacing supply, and it will take years to catch up. Consumers have significantly shifted their list of requirements to include larger houses, more yard space and even having dedicated home offices. That transition means new homes are essential in helping today’s market.” — Bill Banfield, Rocket Mortgage Executive Vice President of Capital Markets
“Housing starts and permits posted a monthly decline in April, as escalating prices for lumber and other building materials price out some home buyers from an otherwise hot housing market. Policymakers need to prioritize the U.S. supply chain for items like building materials to ensure builders can add the additional inventory the housing market desperately needs.” — National Association of Home Builders Chairman Chuck Fowke
“The decline in single-family permits indicates that builders are slowing construction activity as costs rise. While housing starts were strong at the beginning of the year, due to home builders constructing homes that were sold pre-construction, higher costs and limited availability of building materials have now paused some projects.” — National Association of Home Builders Chief Economist Robert Dietz
“Single-family starts in April dropped more than 13% compared to last month, but permits to build single-family homes saw a smaller decline. This is consistent with reports that builders are delaying starting new construction because of the marked increase in costs for lumber and other inputs. Moreover, builders are also reporting difficulty obtaining other inputs like appliances. These supply chain constraints are holding back a housing market that should otherwise be picking up speed, given the strong demand for buying fueled by an improving job market and low mortgage rates. Even with these challenges, there are roughly 640,000 new homes under construction right now, a helpful addition to low supply levels.” — Mortgage Bankers Association SVP and Chief Economist Mike Fratantonis
