Residential starts in April dropped 9.5% monthly to a seasonally adjusted annual rate of 1.57 million units, according to the latest numbers from the U.S. Census Bureau and Department of Housing and Urban Development.
That pace is still up 67.3% from April 202’s rate of 938,000, though that statistic is misleading given the widespread upheaval caused by the onset of the COVID-19 pandemic across the country last spring. The monthly decrease was larger than expected, precipitated by the increased costs of building materials and amplified by unusually wet April weather in the South and Midwest.
“Housing starts … 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,” said Chuck Fowke, chairman of the National Association of Home Builders (NAHB). “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.”
“[April’s data] is consistent with reports that builders are delaying starting new construction because of the marked increase in costs for lumber and other inputs,” concurred Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association. “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.”
The drop was driven by a tumble in single-family starts, which fell 13.4% to a seasonally adjusted annual pace of 1.09 units.
“The decline in single-family permits indicates that builders are slowing construction activity as costs rise,” said NAHB chief economist Robert Dietz. “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.”
Multifamily starts, in comparison, edged upward, increasing 0.8% monthly to a rate of 482,000 units. Growth in overall permitting slowed, though permits are still up 0.3% monthly to reach an annualized rate of 1.76 million units. Single-family permits were down 3.8%, while multifamily permits were up 8.9%.