Construction of new homes in the United States fell in January for the first time in four months, indicating that pandemic-related labor absences have tempered recent gains in construction activity.
Residential housing starts fell 4.1% last month to an annualized rate of 1.64 million, according to government data released Thursday. Still, building applications hit 1.9 million annualized units, the highest since 2006.
High material costs and difficulty in attracting skilled labor remain headwinds for builders, holding back new construction and worsening housing shortages in the markets. In addition, exorbitant prices and the recent increase in mortgage rates may affect affordability.
At the same time, the increase in building permits and a recovery in the number of units authorized but not yet started suggest that residential construction will remain vigorous in the coming months.
“Despite a somewhat slower start to 2022, builders continued to make progress on their home backlog, and consumer demand continues to outstrip supply,” said Kelly Mangold of RCLCO Real Estate Consulting, in a statement. note.
The median estimate from a Bloomberg survey of economists predicted a pace of 1.7 million housing starts in January.
Single-family housing starts fell 5.6% in January to an annualized pace of 1.12 million units, as multi-family housing starts – which tend to be volatile and include buildings of apartments and condominiums – fell to 522,000.
The number of single-family homes approved for construction but not yet started climbed 5.6% to 151,000 in January, one of the highest levels in 15 years.
While residential construction will likely be supported by growing backlogs, sales could be hit by higher borrowing costs. A recent survey showed a record 25% of Americans said now is the time to buy a home.