Overall housing starts increased 2.2% in April and the single-family component rose 1.6% – a gradual improvement, though down 28.1% year-to-year.
WASHINGTON – April single-family production hit its highest rate so far this year, due in part to a lack of existing inventory and stabilizing mortgage rates.
Overall housing starts in April increased 2.2% to a seasonally adjusted annual rate of 1.40 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The unit rate is the number of housing units builders would begin if development kept the same pace for 12 months.
Within the overall number, single-family starts increased 1.6% to an 846,000 seasonally adjusted annual rate. While an ongoing gradual improvement, however, single-family starts were 28.1% one year earlier.
The multifamily sector, which includes apartment buildings and condos, increased 3.2% to an annualized 555,000 pace.
“Single-family starts are showing gradual improvement from the beginning of the year, and this is reflected in our builder sentiment surveys, which are up for five consecutive months,” says Alicia Huey, chairman of the National Association of Home Builders (NAHB). “Due to a lack of inventory for resales, we expect to see further improvement for single-family production in the months ahead, even as builders continue to grapple with supply-chain and labor shortages.”
Since the Federal Reserve appears to be taking a break on interest-rate increases, NAHB Chief Economist Robert Dietz expects “mortgage rates to moderate in the months ahead, and this will lead to a gradual improvement in single-family production. Multifamily permits are down 23% year-over-year, and this indicates a slowdown for apartment construction is underway due to a tighter lending environment.”
On a regional and year-to-date basis, combined single-family and multifamily starts were 8.9% lower in the Northeast, 29.5% lower in the Midwest, 15.9% lower in the South and 29.7% lower in the West.
Overall permits – an indication of future housing starts – decreased 1.5% to a 1.42 million unit annualized rate in April.
But single-family permits increased 3.1% to an 855,000 unit rate, even though down 21.2% year-to-year. Multifamily permits decreased 7.7% to an annualized 561,000 pace.
Looking at regional permit data on a year-to-date basis, permits were 27.2% lower in the Northeast, 28.2% lower in the Midwest, 18.7% lower in the South and 28.6% lower in the West.
The number of single-family homes under construction in April fell to 698,000, down 16% from a peak total of 831,000 in May 2022.
There are now 977,000 apartments under construction – the highest level since September 1973.
© 2023 Florida Realtors®