Housing Starts Fell in April But Remain Up Compared to Last Year

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Housing starts in April were at a seasonally adjusted annual rate of 1.569 million, a decrease of 9.5% compared with March but up 67.3% compared with April 2020, according to estimates from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.

The massive year-over-year increase is due to the economic impact of the pandemic, which peaked in April 2020.

The month-over-month decrease in production is likely due to the rising cost of construction materials.

Starts of single‐family homes were at a rate of 1.087 million, down 13.4% compared with March.

Starts of multifamily homes (five units or more per building) were at an annual rate of 470,000, an increase of 4.0% compared with March.

The estimates are significantly below the 1.7 million starts expected by analysts.

Building permits were at a seasonally adjusted annual rate of 1.760 million, an increase of 0.3% compared with March and an increase of 60.9% compared with April 2020.

Permits for single‐family homes in April were at a rate of 1.149 million, a decrease of 3.8% compared with March.

Permits for multifamily dwellings were at a rate of 559,000, an increase of 11.1% compared with the previous month.

Housing completions were at a seasonally adjusted annual rate of 1.449 million, a decrease of 4.4% compared with March but an increase of 21.7% compared with April 2020.

“Housing starts fell 9.5 percent, month over month, driven by single-family starts,” says Odeta Kushi, deputy chief economist for First American. “Prior to the pandemic builders were faced with a lack of construction workers, lack of buildable lots and restrictive regulatory requirements. Those headwinds remain, but now builders must also grapple with surging lumber prices. The rapid increase in the cost of lumber and supply bottlenecks are increasing the cost of building and delaying projects.”

Kushi notes, however, that “building permits, a leading indicator of future starts, remain strong.”

“The number of single-family homes permitted, but not started increased to 131,000 units – 47 percent higher than a year ago,” she says. “This means more construction is in the pipeline.”

Photo: Annie Gray

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