Housing starts fell in March amid higher-than-expected interest rates, while the latest inflation readings failed to show improvement, according to a new report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Builders also still are facing higher supply-side costs and tighter lending conditions.
“Builders are grappling on several fronts as the inflation fight continues,” Carl Harris, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Wichita, Kan., said in a statement. “Higher interest rates are increasing the cost of housing for prospective home buyers and raising the development and construction cost for builders of homes and apartments. At the same time, shelter inflation is rising faster than overall prices due to supply-side challenges.”
Overall housing starts decreased 14.7% in March, according to the report, to a seasonally adjusted annual rate of 1.32 million units. That 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 12.4% to a 1.02 million seasonally adjusted annual rate. The multifamily sector, which includes apartment buildings and condos, decreased 21.7% to an annualized 299,000 pace.
On a regional and year-to-date basis, combined single-family and multifamily starts are 21.7% lower in the Northeast, 6.0% higher in the Midwest, 0.4% lower in the South and 14.0% higher in the West.
Overall permits decreased 4.3% to a 1.46 million unit annualized rate in March. Single-family permits decreased 5.7% to a 973,000 unit rate. Multifamily permits decreased 1.2% to an annualized 485,000 pace.
Looking at regional data on a year-to-date basis, permits are 34.5% higher in the Northeast, 11.3% higher in the Midwest, 0.9% lower in the South and 1.0% higher in the West.
The number of single-family homes under construction totaled 689,000 in March, down 2.7% from a year ago. The number of apartments under construction totaled 957,000 in March, down 1.6% from a year ago.
