Housing starts slide in September
Housing starts took a step back in September as home builders battle supply chain issues, labor woes, and the rising cost of materials.
Privately‐owned housing starts in September were at a seasonally adjusted annual rate of 1.555 million, a 1.6% drop from the revised August estimate of 1.580 million, according to the latest Monthly Residential Construction Report released today by the U.S. Census Bureau and the U.S. Department of Housing and Urban.
The latest report is 7.4% above the September 2020 rate of 1.448 million, however.
Single‐family housing starts in September were at a rate of 1.080 million and flat from the revised August figure of 1,080,000.
The multifamily sector, which includes apartment buildings and condos, decreased 5% to a 475,000 pace.
“Single-family construction continued along recent, more sustainable trends in September,” said Chuck Fowke, chairman of the National Association of Home Builders (NAHB). “Lumber prices have moved off recent lows, but the cost and availability of many building materials continues to be a challenge for a market that still lacks inventory. Policymakers should continue to work to improve supply-chains.”
Housing permits in September dropped 7.7% to a seasonally adjusted annual rate of 1.589 million below the revised August rate of 1.721,000 million. The latest figures break even with the September 2020 rate of 1.589 million.
Single‐family authorizations in September were at a rate of 1.040 million, 0.9% below the revised August figure of 1,050 million.
Here’s how single-family starts and permits performed in September on a regional basis compared to the prior month:
- In the Northeast, total starts plunged 27.3% as single-family starts slipped 1.5%. Permits fell 20% as single-family starts declined 16.4%.
- In the Midwest, total starts ascended 6.9% as single-family starts climbed 7%. Overall permits were down edged downward 0.5% as single-family permits dipped 0.8%.
- Combined starts in the South decreased 6.3% as single-family starts dropped 6.6%. Total permits slipped 0.6% but single-family permits increased 1.6%.
- Overall starts in the West jumped 19.3% as single-family starts increased 17.8%. Combined permits decreased 10.9% as single-family permits fell 3.6%.
Yesterday, the NAHB reported that builder sentiment climbed in October.
The latest NAHB/Wells Fargo Housing Market Index, measuring builder confidence in the market for new single-family homes, increased 4 points to 80 this month.
“Builder confidence increased in October, which confirms stabilization of home construction at current levels,” said NAHB Chief Economist Robert Dietz. “The number of single-family units in the construction pipeline is 712,000, almost 31% higher than a year ago as more inventory is headed to market. Multifamily construction has expanded as well, with almost a 6% year over year gain for apartments currently under construction.”
Regarding the prices of new homes, National Association of Realtors Chief Economist Lawrence Yun noted that the trend among new homes doesn't meet the needs of many buyers.
"Newly constructed homes are generally larger in size and more expensive than existing homes, and not geared toward first-time buyers," Yun said. "Nonetheless, more supply of these homes allows trade-up buyers to make their move and in the process place their previous homes on the market. In addition to construction, more inventory will appear as the mortgage forbearance program is winding down."
The Monthly New Residential Construction for September 2021 is available here.