Housing production rebounded in March, helping to slowly fill the inventory gap that’s been increasing with strong buyer demand due to low mortgage interest rates. According to the latest data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, overall housing starts increased 19.4% to a seasonally adjusted annual rate of 1.74 million units. March hit a record for the fastest pace for combined single-family and multifamily construction since June 2006.
According to the National Association of Home Builders (NAHB), 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% a 1.24 million seasonally adjusted annual rate. The multifamily sector, which includes apartment buildings and condos, increased 30.8% to a 501,000 pace.
The Breakdown:
Housing Starts:Â 1.58 million (+16.6%% month-over-month, +23.4% year-over-year)
Multifamily Starts: 476,000
Single-Family Starts: 1,099,000
Building Permits:Â 1.76 million (+2.7% month-over-month, +30.2% year-over-year)
Multifamily Permits: 508,000
Single-Family Permits: 1,199,000
Completions:Â 1.58 million (+6.6% month-over-month, +23.4% year-over-year)
Multifamily Completions: 476,000
Single-Family Completions: 1,099,000
Regional Year-to-Date Data
Midwest:Â +2.0%
South: +6.4%
West:Â +0.0%
Northeast:Â -8%
What the Industry Is Saying
“The housing inventory shortage has been pushing up prices, but also holding back home sales. In nearly every market, 20% more inventory means 20% more home sales. news on the new-home construction surge is, therefore, highly welcomed, especially in light of major challenges on material costs and soaring lumber prices. The March figure of 1.74 million housing starts is the highest in 14 years. Both single-family units and multifamily units ramped up.
“After 13 straight years of underproduction—the chief cause for today’s inventory shortage—this construction boom needs to last for at least three years to make up for the past shortfall. As trade-up buyers purchase newly constructed homes, their prior homes will show up in MLSs, and hence, more choices for consumers. Housing starts to housing completion could be four to eight months, so be patient with the improvement to inventory. In the meantime, construction workers deserve cheers.” — Lawrence Yun, Chief Economist, National Association of REALTORS®
“Rising costs for supplies did not deter builders in March. There is a strong understanding of the role an increase in new homes plays in today’s housing market and we hope this momentum will continue throughout the year to ensure there are homes to meet the extreme demand from buyers.” — Bill Banfield, Vice President of Capital Markets, Rocket Mortgage
“Builder confidence remains strong, pointing to gains for single-family construction in 2021. However, rising costs for most kinds of building materials continue to impede positive additional momentum in the market.” — Chuck Fowke, Chairman, NAHB
“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. The test for the industry this year will be balancing growth and higher construction costs, given ongoing housing affordability challenges.” — Robert Dietz, Chief Economist, NAHB
“March job numbers showed a pickup in construction employment. Those job gains were matched by a notable increase in the pace of building, with housing permits up last month and running 30% ahead of last year’s pace, along with starts up 37%. Single-family starts increased even more—rising 15.3% after declines in the previous two months.
“The biggest challenge facing the housing market right now is the lack of supply. This news of more new inventory on the way is very positive. Although we do not expect a rapid cooling in the pace of home-price growth, there should be some deceleration over the course of 2021 as these additional units enter the market.” — Mike Fratantoni, SVP & Chief Economist, Mortgage Bankers Association
