Steel Markets

Housing Starts Up in June Despite Supply-Side Constraints

Written by David Schollaert

Housing starts accelerated in June, jumping 6.3% from May to a seasonally adjusted annual rate of 1.64 million units, according to the latest data from the U.S. Census Bureau and the Department of Housing and Urban Development. Single-family starts increased 6.3% to a 1.16 million seasonally adjusted annual rate, while construction on homes of five units or more increased 6.2% to a 483,000 pace.

construction3Despite the increase in housing production, there is concern over weakening permit numbers for both the single-family and multifamily markets. Overall permits decreased 5.1% in June compared with the month prior to a 1.60-million-unit annualized rate. Single-family permits decreased 6.3% to a 1.06-million-unit rate, whereas multifamily permits decreased 2.6% to a 535,000 pace.

“The recent weakening of single-family and multifamily permits is due to higher material costs, which have pushed new home prices higher since the end of last year,” National Association of Home Builders Chief Economist Robert Dietz said. “This is a troubling sign for future housing production. This is a challenge for a housing market that needs additional inventory.”

The count of single-family homes currently under construction is 675,000, up 32% compared to a year ago. The number of multifamily units under construction is up 2% to 684,000 apartments.

“While lumber prices have just recently begun to trend downward, builders continue to deal with rising prices of other building materials, such as oriented strand board, and major delays in the delivery of these goods,” NAHB Chairman Chuck Fowke said. “We are thankful that the White House recently held a meeting to seek solutions to these supply chain issues that are harming housing affordability.”

On a regional and year-to-date basis, combined single-family and multifamily starts are 41.4% higher in the Northeast, 25.5% higher in the Midwest, 21.5% higher in the South and 28.0% higher in the West.

Looking at regional permit data on a year-to-date basis, permits are 33.2% higher in the Northeast, 31.9% higher in the Midwest, 29.6% higher in the South and 32.2% higher in the West.

David Schollaert

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