NAHB: Multifamily Growth Lifts Housing Starts

Ongoing supply chain limitations and labor challenges continue to hinder starts, impacting housing affordability. Single-family starts decreased 2.8% to a 1.08 million seasonally adjusted annual rate, but are up 23.8% year-to-date. The multifamily sector, which includes apartment buildings and condos, increased 20.6% to a 539,000 pace.

“Single-family construction is normalizing at more sustainable levels after an increase in building material pricing,” said Chuck Fowke, NAHB’s chairman. “Demand remains strong, but the market is facing increasing housing affordability issues after a run-up in new and existing home prices. Multifamily construction increased in August, with NAHB expecting a solid gain for apartment construction in 2021 after a slight decline last year.”

On a regional and year-to-date basis, combined single-family and multifamily starts are 35.9% higher in the Northeast when compared to the same year-ago period. The Midwest is up 14.0%, the South is up 20.2%, while the West is 23.9% higher.

Overall, permits increased 6.0% to a 1.73-million-unit annualized rate in August. Single-family permits increased 0.6% to a 1.05-million-unit rate. Multifamily permits increased 15.8% to a 674,000 pace.

On a year-to-date basis, regional permits are 25.6% higher in the Northeast, 21.7% higher in the Midwest, 25.6% higher in the South, and 28.1% higher in the West. Single-family units permitted but not started are up 50.0% from a year ago, a sign of persistent supply-chain issues.

“More inventory is coming for a market that continues to face a housing deficit,” said Robert Dietz, the association’s chief economist. “The number of single-family homes under construction in August — 702,000 — is the highest since the Great Recession and is 32.7% higher than a year ago. While some building materials, like lumber, have seen easing prices, delivery delays and a lack of skilled labor and building lots continue to hold the market back.”