New Home Starts Rebound But Shortage Is Still Huge

New-home construction increased 19% between March and February, to be expected after a winter slowdown, but surged 37% compared to March 2020 to reach a seasonally-adjusted rate of 1.74 million units.

Permits for new homes also increased during March, up 2.7% from February and 30% from the comparable year ago period for a seasonally-adjusted pace of 1.77 million. Economists polled by MarketWatch had expected housing starts to occur at a pace of 1.62 million and building permits to come in at a pace of 1.75 million.

The largest gains in new-home construction occurred in the Midwest, where housing starts more than doubled on a monthly basis. The Northeast and the South also saw faster rates of new-home construction, while home-building activity slowed in the West.

Building permits were more of a mixed-bag. At the national level over the past month, permits for single-family homes increased nearly 5%, while authorizations for multifamily development dropped by almost 4%. Notably, permits for duplexes, triplexes and quadplexes surged 25.5%, suggesting that cities across the country are looking to encourage higher density neighborhoods to meet the excess demand for housing.

America’s problem, right now, is there aren’t enough homes to go around. A new analysis from Freddie Mac estimated that the U.S. is 4 million homes short of meeting the demand of home buyers, The Wall Street Journal reported Thursday. And that shortage has increased more than 50% since 2018.

Making matters even worse, until recently sellers have remained on the sidelines of the housing market. They’re facing the same challenges as first-time buyers — if you can’t find another home to buy, you’re not going to sell. In March, there were 117,000 fewer sellers of existing homes.

Read More