US single-family permits decline in March as affordability woes continue
April 19, 2022 By National Association of Home Builders
The single-family housing market continued to show signs of softening in March as permits and starts declined due to rising mortgage interest rates and ongoing supply chain bottlenecks that continue to delay construction projects and raise home building costs.
Due to strong multifamily production, overall housing starts increased 0.3 per cent to a seasonally adjusted annual rate of 1.79 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
The March reading of 1.79 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 1.7 per cent to a 1.20 million seasonally adjusted annual rate. The multifamily sector, which includes apartment buildings and condos, increased 4.6 per cent to an annualized 593,000 pace.
“Higher mortgage interest rates and rising construction costs are pricing buyers out of the market, and these higher costs are particularly hurting entry-level and first-time buyers,” said Jerry Konter, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Savannah, Ga. “Policymakers must address building supply chain disruptions to help builders bring down construction costs and increase production to meet market demand.”
“The shift in affordability can be seen in the March data with strength for multifamily construction and some weakness for single-family permits,” said NAHB chief economist Robert Dietz. “Our builder surveys show that confidence levels in the single-family market have declined for four straight months as affordability conditions continue to worsen, and this is a sign that single-family production will face challenges moving forward.”
On a regional and year-to-date basis, combined single-family and multifamily starts are 17.3 per cent higher in the Northeast, 6.6 per cent higher in the Midwest, 11.2 per cent higher in the South and 7.5 per cent higher in the West.
Overall permits increased 0.4 per cent to a 1.87 million unit annualized rate in March. Single-family permits decreased 4.8 per cent to a 1.15 million unit rate. Multifamily permits increased 10.0 per cent to an annualized 726,000 pace.
Looking at regional permit data on a year-to-date basis, permits are 5.5 per cent higher in the Northeast, 4.0 per cent higher in the Midwest, 7.5 per cent higher in the South and 4.9 per cent higher in the West.
Single-family permits authorized but not started increased 7.6 per cent in March to 127,000 and are up 30.9 per cent year-over-year as higher construction costs and material delays slow previously permitted projects.
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