Rising inflation and supply chain issues are all impacting new home construction in the US

Lower building permits for single-family homes in March

The National Association of Home Builders reports this week that the U.S. single-family housing market continued to show signs of slowing in March 2022, as permits and housing starts fell due to rising mortgage interest rates. and ongoing supply chain bottlenecks that continue to delay construction projects. and increase house construction costs.

Due to strong multifamily production, overall housing starts rose 0.3% 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 US Census Bureau.

The March 2022 reading of 1.79 million housing starts is the number of home builders that would start if development maintained that pace for the next 12 months. Within that overall number, single-family home starts fell 1.7% to a seasonally-adjusted annual rate of 1.20 million. The multifamily sector, which includes apartment buildings and condos, rose 4.6% to an annualized pace of 593,000.

“Rising mortgage interest rates and rising construction costs are pushing buyers away from the market, and these higher costs are hurting first-time buyers and first-time buyers in particular,” said Jerry Konter, president of the National Association of Home. Builders. “Policymakers must address building supply chain disruptions to help builders reduce construction costs and increase production to meet market demand.”

“The shift in affordability can be seen in the March data with strength in multi-family construction and some weakness in single-family permits,” said NAHB chief economist Robert Dietz. “Our builder surveys show that confidence levels in the single-family home market have declined for four consecutive months as affordability conditions continue to deteriorate, and this is a sign that single-family production will face headwinds. challenges in the future.”

On a regional basis and year-to-date, single-family and multi-family housing starts combined are 17.3% higher in the Northeast, 6.6% higher in the Midwest, 11.2% higher in the South and 7.5% higher in the West.

Overall permits rose 0.4% to an annualized rate of 1.87 million units in March. Single-family permits fell 4.8% to 1.15 million units. Multi-family permits rose 10.0% to an annualized pace of 726,000.

Looking at year-to-date regional permit data, permits are 5.5% higher in the Northeast, 4.0% higher in the Midwest, 7.5% higher in the south and 4.9% higher in the west.

Authorized but not started single-family permits rose 7.6% in March to 127,000 and are up 30.9% year-over-year as rising construction costs and material delays slow previously authorized projects.

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