Nationwide housing stats dropped in March, despite continued high buyer demand, which happens to be adding pressure to overall homes available as well as home prices.
Housing starts for single-family and multifamily homes dropped 6.8% in March to a seasonally adjusted annual rate of 1.22 million units, the Commerce Department reported Tuesday. Broken out, single-family production plunged 6.2% to an annual rate of 821,000 units in March month over month, following a strong February reading. Multifamily starts dropped 7.9 % to an annual pace of 394,000.
Far fewer New Homes in Pipeline Drives Up Pricing
The constraint in new-home construction is proving a big challenge for the overall housing market, says Lawrence Yun, the chief economist for the National Association of REALTORS®.
“A major housing shortage exists in this country,” Yun said in a statement. “It is therefore disappointing to witness in March the continued lackluster performance in new-home building, which was the second lowest activity over the past six months. Home prices have risen by 41% and rents have climbed 17% over the past five years at a time when the typical worker wage has grown by only 11%. To relieve housing costs, there simply needs to be more homes built.”
Across the country, single- and multifamily housing production fluctuated in March. In the Northeast, housing production rose 12.9 % in March month over month, but dropped in other regions, posting a 16.2% decrease in the Midwest, a 16% drop in the West, and a 2.9% drop in the South, the Commerce Department reported.
Despite March’s nationwide drop, the National Association of Home Builders notes that overall housing production for single-family homes in the first quarter of this year remains to be 8.1% higher than the pace in 2016.
“The three-month moving average for single-family starts has reached a post-recession high, which shows that this sector is continuing to firm,” says NAHB Chief Economist Robert Dietz. “We can expect further gains in single-family production throughout the year, while multifamily starts should level off.”
Housing permits-a gauge of future production-is holding promise for a turnaround. Permit issuance in March rose 3.6% to a seasonally adjusted annual rate of 1.26 million units, but that was all buoyed by way of a pickup in multifamily permits. Multifamily permits increased 13.8% to 437,000 units while single-family permits in March were down 1.1% to 823,000.
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