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MAY 2021
April Housing Starts Plunge as Lumber Remains Scarce
After cresting a 15-year high in March that was fueled by a breakneck building pace in the Midwest (where total housing starts were up nearly 123 percent month-over-month), homebuilding reversed course and surprisingly dropped in April.
Housing Starts, Permits & Completions
Privately-owned housing starts decreased 9.5 percent in April to a seasonally adjusted annual rate (SAAR) of 1.569 million units. Single-family starts decreased 13.4 percent to a rate of 1.087 million units. Starts for the volatile multi-family segment rose 0.8 percent to a pace of 482,000 units.
Privately-owned housing authorizations were up 0.3 percent to a rate of 1.760 million units in April and single-family authorizations were down 3.8 percent to a pace of 1.149 million units. Privately-owned housing completions were down 4.4 percent to a SAAR of 1.449 million units. Per the US Census Bureau Report, seasonally-adjusted MoM total housing starts by region included:
Northeast: +6.2 percent (+64 percent last month)
South: -11.5 percent (+13.5 percent last month)
Midwest: -34.8 percent (+122.8 percent last month)
West: +9.0 percent (-13.6 percent last month)
Seasonally-adjusted MoM single-family housing starts by region included:
Northeast: -13.0 percent (+28.6 percent last month)
South: -12.5 percent (+10.9 percent last month)
Midwest: -32.3 percent (+109 percent last month)
West: 0.0 percent (-12.6 percent last month)
The tumble in April housing starts was concentrated in the single-family segment, which supports speculation that supply chains for construction materials are simply stressed beyond capacity. "Builders are delaying starting new construction because of the marked increase in costs for lumber and other inputs," said Mike Fratantoni, Chief Economist at the Mortgage Bankers Association. "These supply-chain constraints are holding back a housing market that should otherwise be picking up speed, given the strong demand for buying fueled by an improving job market and low mortgage rates."
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The 30-year fixed mortgage rate ticked down in April from 3.08 to 3.06, and speculation is that rates are likely to increase in the coming months. The NAHB/Wells Fargo Housing Market Index (HMI) remains unchanged from last month at 83.