Residential construction took another step back in October, with the U.S. Census Bureau and U.S. Department of Housing and Urban Development announcing that housing starts were at a seasonally adjusted annual rate of 1.52 million units for the month.
That’s 0.7% below September’s revised pace of 1.53 million units, although it’s still up 0.4% year over year. Overall housing starts have now dropped for two straight months, with lagging single-family construction pulling down the overall figure.
Single-family housing starts, while still up 16.7% year to date, dropped 3.9% month over month to a seasonally adjusted annual pace of 1.04 million units in October. This marked a fourth consecutive month of retreating construction for single units. Single-family starts are now at their lowest level since August 2020.
Ongoing challenges with construction materials continue to hinder more consistent building activities, with Reuters noting that construction costs vaulted by 12.3% annually in October — a record year-over-year jump. Due to supply chain constraints, 152,000 single-family units are authorized for construction but have yet to start, up by a whopping 43.4% from the same month last year.
“The rising count of homes permitted but not yet started construction is a stark reminder to policymakers to fix the supply chain so that builders can access a steady source of lumber and other building materials to keep projects moving forward,” said Chuck Fowke, chairman of the National Association of Home Builders (NAHB).
Permitting was up 4% month over month in October, offering room for optimism ahead. The bulk of this permitting growth, however, was seen in multifamily housing, which will do little to ease the shortage of for-sale listings and, consequently, still-surging home prices.
“Single-family permit data has been roughly flat on a seasonally adjusted basis since June due to higher development and construction costs,” said Robert Dietz, NAHB’s chief economist. “Demand remains solid but housing affordability is likely to decline in 2022 with rising interest rates.”