Good afternoon —
When will we get more housing stock coming online? If today's housing starts report is any indication, not soon enough.
Single-family housing starts in April dropped 13.4% from March to 1.09 million, according to the most recent study from the U.S. Census Bureau.
Housing completions were at 1.045 million in April, just 0.1% above the March rate of 1.04 million.
Mike Fratantoni, MBA's chief economist, says that's proof builders are delaying housing starts due to the high cost of lumber and other materials.
"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," Fratantoni said.
It's easy to see why builders might be hesitant. Lumber costs have added about $36K to every new home build this year, and regulatory costs can be significantly more, about 23% of the total house price.
"Some builders are reporting changed practices in response to the challenges, including limiting the sales of custom homes and capping volume so as to not burn through their existing inventory of materials," said Matthew Speakman, Zillow economist.
"And in an environment where starting construction on a home might be the most difficult step in the process, the share of homes authorized but not yet started surged to the highest level recorded since data collection began in 1999 — a sign that builders are waiting for some sales certainty before committing to put hammer to nail."
Our recent reporting on hot housing markets (Seattle, Austin and Scottsdale for example) confirms this hesitancy — builders have stopped taking orders or pushed out the start date to 18 months or more.
I interviewed Robert Dietz, chief economist at NAHB, about these and other challenges on a recent episode of our Housing News podcast. It's worth a listen.
Until tomorrow —
Sarah Wheeler
HousingWire Editor in Chief
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