Never-ending supply chain woes and a seemingly impossible to solve labor shortage continued to hamper the building industry in October, with single-family home starts falling again.
A report from the U.S. Department of Housing and Urban Development and the Census Bureau this week revealed that single-family home starts fell 4% in October on a monthly basis, to a seasonally-adjusted rate of 1.04 million.
In the long term, single-family housing starts are faring better though, as they’re up 16.7% in the year to date.
National Association of Home Builders Chairman Chuck Fowke said the rising number of homes that have secured permits but have not yet broken ground should serve as a stark reminder to policymakers to fix supply chain that have led to shortages of key building materials across the U.S. He said this is necessary so “builders can access a steady source of lumber and other building materials to keep projects moving forward.”
Builders say there are 152,000 homes in the U.S. that have secured housing permits - meaning they are authorized to begin construction work on them – that have not yet broken ground. That’s up a staggering 43% from one year ago. But it’s not just the lack of supplies that builders are blaming. They also point to a shortage of skilled tradesmen, such as carpenters, painters, electricians and other trades.
The NAHB’s Chief Economist Robert Dietz said single-family permit data remained roughly flat on a seasonally-adjusted basis since June, a result of higher development and construction costs. “Demand remains solid but housing affordability is likely to decline in 2022 with rising interest rates.”
There was at least a promising jump in multifamily home construction, where starts increased by 7.1% to a seasonally-adjusted rate of 481,000 units. Multifamily homes include apartments and condos as well as townhomes.
The boost in multifamily starts meant that overall housing starts fell by just 0.7% to an annualized pace of 1.52 million homes.
Looking at new housing starts on a regional basis for the year-to-date, it’s clear that some areas have greater problems than others. In the Northeast, overall housing starts are up 30.2%, while the West is up 20.4%. Starts were up 15.2 in the South and just 10.7% higher in the Midwest.
As for permits, they increased 4% on a sequential month-to-month basis to an annualized rate of 1.65 million units in October. Single-family permits were up 2.7% to a rate of 1.07 million units, while Multifamily permits rose 6.6% to 581,000 units.
Regional permit data shows an increase of 23% in the West, 20.4% in the South, 17.2% in the Midwest and 14.4% in the Northeast.