Home Construction Backlog Surges, Worsening Shortages, Even as Multifamily Starts Increase
Highlights:
- Housing starts fall 0.7% in October
- Single-family starts drop 3.9%; multi-family up 6.8%
- Building permits rise 4.0%; single-family gain 2.7%
WASHINGTON, Nov 17 (Reuters) – U.S. single-family homebuilding tumbled in October while the number of houses authorized for construction but not yet started jumped to a 15-year high, underscoring the disruption to the housing market from an ongoing shortage of materials and labor.
Though the report from the Commerce Department on Wednesday showed an increase in permits for future homebuilding, the rise was concentrated in the volatile multi-family housing segment. This will do little to alleviate an acute shortage of houses on the market, which has led to record annual gains in home prices.
“Residential
housing construction activity continues to flounder,” said Christopher
Rupkey, chief economist at FWDBONDS in New York. “There are zoning
problems, higher land costs, a lack of labor, and inflation has inflated
the cost of raw building materials.”
Single-family
housing starts, which account for the largest share of the housing
market, dropped 3.9% to a seasonally adjusted annual rate of 1.039
million units last month. The fourth-straight monthly decline pushed
starts to the lowest level since August 2020. Homebuilding fell in all
four regions, with large decreases in the Northeast, Midwest, and West.
Permits
for buildings with five units or more surged 6.5% to a rate of 528,000
units. Housing completions were unchanged at a rate of 1.242 million
units. Single-family home completions dropped 1.7% to a rate of 929,000
units.
The
stock of single-family housing under construction increased 1.4% to a
rate of 726,000 units last month, the highest since May 2007.
Multi-family homes under construction rose to the highest level in more
than 47 years.
Over
time the housing backlogs and more inventory could help to bring more
homes on to the market and cool the house price inflation, which has
sidelined some first-time buyers. A lot will, however, hinge on the
supply of building materials and other inputs as well as labor.
“The
recent slowdown in project completions has limited home sales in new
communities,” said Mark Vitner, a senior economist at Wells Fargo in
Charlotte, North Carolina. “That said, the growing backlog of projects
should keep builders busy for the next couple of years.”
Source: Reuters. Story by Lucia Mutikani. Read full story.