Buyers have been drawn to new-home construction as existing housing inventories remain lean. Builders have struggled to ramp up construction even more due to the high demand as building materials, labor, and lot shortages loom.
However, builders say they’re building as much as they can and as quickly as they can given such challenges.
Housing starts for both single-family and multifamily homes rose 11.8% to a seasonally adjusted annual rate of 1.68 million units in November, the U.S. Department of Housing and Urban Development and U.S. Census Bureau reported on Thursday. Broken out, single-family housing starts increased 11.3% to a 1.17 million annual rate while the multifamily sector, which includes apartment buildings and condos, climbed 12.9% to an annual 506,000 pace.
“Single-family housing starts accelerated near the end of 2021 and are up 15.2% this year-to-date as demand for new construction remains strong due to lean inventory of resale housing,” says Chuck Fowke, chairman at the National Association of Home Builders. “Policymakers need to help alleviate ongoing building material supply chain bottlenecks that are preventing builders from keeping up with buyer demand.”
Single-family completions within new-home construction will increase in 2022, adds Robert Dietz, the NAHB’s chief economist. This will bring “more inventory to market despite a 19% year-over-year rise in construction material costs and longer construction times,” he says.
Regionally, new-home construction starts including both single-family and multifamily housing on a year-to-date basis (January through November of 2021) were up by the most in the Northeast, jumping 24.4% compared to the previous year. Gains followed by 19.4% in the West, 15.4% in the South, and 9.6% in the Midwest.
Permits—a gauge of future construction—climbed 3.6% in November to a 1.71 million unit annual rate. Permits are rising by the most in the West and South.