The single-family housing market continued to show signs of softening in March as permits and starts declined due to rising mortgage interest rates and ongoing supply chain bottlenecks that continue to delay construction projects and raise home building costs.
Due to strong multifamily production, overall housing starts increased 0.3 percent 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 U.S. Census Bureau.
The March reading of 1.79 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 1.7 percent to a 1.20 million seasonally adjusted annual rate. The multifamily sector, which includes apartment buildings and condos, increased 4.6 percent to an annualized 593,000 pace.
“Higher mortgage interest rates and rising construction costs are pricing buyers out of the market, and these higher costs are particularly hurting entry-level and first-time buyers,” says Jerry Konter, chairman of the National Association of Home Builders. “Policymakers must address building supply chain disruptions to help builders bring down construction costs and increase production to meet market demand.”
“The shift in affordability can be seen in the March data with strength for multifamily construction and some weakness for single-family permits,” says Robert Dietz, NAHB chief economist. “Our builder surveys show that confidence levels in the single-family market have declined for four straight months as affordability conditions continue to worsen, and this is a sign that single-family production will face challenges moving forward.”
Overall permits increased 0.4 percent to a 1.87 million unit annualized rate in March. Single-family permits decreased 4.8 percent to a 1.15 million unit rate. Multifamily permits increased 10 percent to an annualized 726,000 pace.
Single-family permits authorized but not started increased 7.6 percent in March to 127,000 and are up 30.9 percent year-over-year as higher construction costs and material delays slow previously permitted projects.
