Builders Pulling Back on Single-Family Home Construction
Despite a significant housing shortage nationwide, homebuilders are finalizing their projects and are not actively pursuing as many permits for new single-family homes.
According to a report released Thursday by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD), privately owned housing starts increased to a seasonally adjusted annual rate of 1.360 million units. This reflects a 5.7% month-over-month increase but a 0.6% decrease compared to the same time last year.
According to Housing Wire, the growth, however, was driven by multifamily housing starts, which ticked up to 322,000 units. Single‐family housing starts in April fell to 1.031 million units, 0.4% below the revised March figure of 1.035 million. Starts of new units in multifamily buildings also continue to track far below year-ago levels, according to Bright MLS chief economist Lisa Sturtevant.
The rate at which building permits were issued in April also dropped. It fell by 3% month over month to a seasonally adjusted annual rate of 1.440 million. It was down by 2% from the same time last year. Notably, the number of single-family authorizations was down 0.8% month over month in April to a rate of 976,000 units. Meanwhile, multifamily authorizations decreased to a rate of 408,000 units. Mortgage rates, which remain firmly above 7%, have cooled builders’ interest in new construction.
“Given the recent declines in housing starts, home completions will steadily show declines in about six months,” Lawrence Yun, chief economist for the National Association of Realtors (NAR), said in a statement. “The housing shortage is not going away. The laws of supply and demand tell us that home prices are on firm ground and could even reaccelerate in the future unless more is done to boost supply.”
Housing completions picked up significantly in April compared to March, increasing by 8.6% to 1.623 million units. It was the second-highest monthly figure in 15 years, Yun said. Single‐family completions rose by 15.4% between March and April to a rate of 1,093 million. Meanwhile, multifamily completions came in at a rate of 516,000 in April.
