Housing starts jumped almost 20% in March compared with February, reaching a seasonally adjusted annual rate of 1.739 million, according to the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
That’s up 37% compared with March 2020 – however, much of the annual increase is due to the slowdown in home construction which resulted when the pandemic first struck last year.
Starts of single-family homes were at an annual rate of 1.238 million, an increase of 15.3% compared with February.
Starts of multifamily properties (five units or more per building) were at an annual rate of 477,000, an increase of 30% compared with February.
Building permits were also up: They increased 2.7% in March compared with February to reach an adjusted rate of 1.766 million.
Year-over-year, building permits were up 30.2%.
Permits for single-family homes were at a rate of 1.199 million, an increase of 4.6% compared with the previous month.
Permits for multifamily dwellings were at a rate of 508,000 in March, a decrease of 3.6% compared with the previous month.
Housing completions were at a seasonally adjusted annual rate of 1,580 million, an increase of 16.6% compared with February and up 23.4% compared with March 2020.
Odeta Kushi, deputy chief economist for First American, says the increase is “good news for a housing market parched for supply.”
“Housing starts for single-family homes are up 15 percent month over month,” Kushi says in a statement. “Another positive indicator is the overall number of permits issued for single-family homes, which can signal how much construction is in the pipeline, increased 4.6 percent relative to February.”
“Single-family housing completions also increased to its fastest pace since 2007,” Kushi says. “An increase in completions mean more homes on the market in the short-term, providing immediate relief to home buyers in supply-constrained markets.
“There continues to be a demographic-fueled shift away from renting to home-owning driven by millennials aging into homeownership, but the challenge is the historic lack of supply,” she adds. “March’s housing starts report indicates progress is being made.”
“Builder confidence remains strong, pointing to gains for single-family construction in 2021,” says Chuck Fowke, chairman of the National Association of Home Builders (NAHB), in a statement. “However, rising costs for most kinds of building materials continue to impede positive additional momentum in the market.”
“Demand remains solid due to low mortgage interest rates and a thin level of inventory in the resale market, which is spurring the need for additional supply,” adds Robert Dietz, chief economist for NAHB. “The test for the industry this year will be balancing growth and higher construction costs, given ongoing housing affordability challenges.”
Photo: Annie Gray