Steel Markets

Housing Starts Spring Upwards in March

April 23, 2021

Home builders had a busy month in March as housing starts jumped 19.4% to a seasonally adjusted annual rate of 1.74 million. According to the report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, starts were 37% higher than the rate one year ago. Construction started on 1.24 million single-family homes in March, up 15.3% from February, while apartment-style homes of five units jumped 30% to 477,000.

Housing starts climbed at their fastest pace for residential construction since June 2006, said the National Association of Home Builders. Starts soared 112.8% in the Midwest with the arrival of spring weather. Elsewhere, starts were 64% higher in the Northeast and 13% higher in the South, but fell 13.6% in the West.

“Demand remains solid due to low mortgage interest rates and a thin level of inventory in the resale market, which is spurring the need for additional supply,” said NAHB Chief Economist Robert Dietz. “The test for the industry this year will be balancing growth and higher construction costs, given ongoing housing affordability challenges.”

Building permit authorizations, a measure of future construction, rose 2.7% from February to a SAAR of 1.77 million and up 30.2% compared to March 2020. Single-family permit authorizations rose 4.6% to 1.2 million. Homes with five units or more were approved at a rate of 508,000 last month.

Compared to February, permits were 8% lower in the Northeast, 2% higher in the Midwest, up 6.4% in the South and flat in the West.

The strong data from March backed up the confidence builders are showing in the housing market. The April 15 NAHB/Wells Fargo Housing Market Index (HMI) was at a solid 83, up one point from March. Contractors, however, continue to express concerns about pricing and availability of building materials.

“Despite strong buyer traffic, builders continue to face challenges to add much needed housing supply to the market,” said NAHB Chairman Chuck Fowke. “The supply chain for residential construction is tight, particularly regarding the cost and availability of lumber, appliances and other building materials. Though builders are seeking to keep home prices affordable in a market in need of more inventory, policymakers must find ways to increase the supply of building materials as the economy runs hot in 2021.”