Housing Starts Spring Forward in March

Despite the rising cost for lumber and other building materials, Housing starts for combined single-family and multifamily construction were off to their fastest pace during March since June 2006.

Also, builder confidence remains strong in spite of supply-side challenges, according to the NAHB/Wells Fargo Housing Market Index (HMI). Builders report concerns over increasing lumber and other construction costs, as well as delays in obtaining building materials. Rising interest rates will also erode housing affordability in 2021, however rates have fallen back in recent weeks. Builders also reporting growing concerns about a more challenging regulatory environment that could limit land development volume. The NAHB forecast includes some weakening for single-family home building at the start of 2021 (off recent highs last Fall), with a return to the long-run post-Great Recession trend as the year progresses. This is consistent with the 3-month moving average data plotted above.

It is also worth noting that the number of single-family homes permitted but not started construction continued to increase in March, rising to 124,000 units. This is 39% higher than a year ago, as building material cost increases and delays slow some home building.

Read More