Eye On Housing
Single-family housing production lagged in October due to supply-chain effects for materials and ongoing access issues for labor and lots. Overall housing starts decreased 0.7% to a seasonally adjusted annual rate of 1.52 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
The October reading of 1.52 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 3.9% to a 1.04 million seasonally adjusted annual rate, and are up 16.7% year-to-date. The multifamily sector, which includes apartment buildings and condos, increased 7.1% to an annualized 481,000 pace.
Due to supply-chain effects, there are 152,000 single-family units authorized but not started construction—up 43.4% from a year ago.
In November, single-family builder confidence increased three points to a level 83 on strong buyer demand, according to the NAHB/Wells Fargo Housing Market Index (HMI). After peaking at a level of 90 last November, builders have reported ongoing concerns over elevated lumber and other construction costs, as well as delays in obtaining building materials. The NAHB forecast calls for growing labor shortages as the overall unemployment rate trends lower in the quarters ahead.
While the single-family sector cooled at the start of 2021, off the unsustainable seasonally adjusted pace of last Winter, recent readings, including the HMI, suggest ongoing stabilization. For example, single-family permits have been stable since June near a 1.05 million annualized rate.
Multifamily construction continues to show strength. After posting a slight decline in 2020, 5+ unit production is up 18.4% on a year-to-date basis. However, the “missing middle,” 2 to 4 unit production, has posted an actual decline thus far in 2021 (1.3% decline on a year-to-date basis).
On a regional and year-to-date basis (January through October of 2021 compared to that same time frame a year ago), combined single-family and multifamily starts are 30.2% higher in the Northeast, 10.7% higher in the Midwest, 15.2% higher in the South and 20.4% higher in the West.
As an indicator of the economic impact of housing, there are now 726,000 single-family homes under construction. This is 28% higher than a year ago. There are currently 725,000 apartments under construction, up 10% from a year ago. Total housing units now under construction (single-family and multifamily combined) is 18% higher than a year ago.
Overall permits increased 4.0% to a 1.65 million unit annualized rate in October. Single-family permits increased 2.7% to a 1.07 million unit rate. Multifamily permits increased 6.6% to an annualized 581,000 pace.
Looking at regional permit data on a year-to-date basis, permits are 14.4% higher in the Northeast, 17.2% higher in the Midwest, 20.4% higher in the South and 23.0% higher in the West.
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