The latest report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau reveals positive growth in the housing market, with single-family housing starts reaching the highest rate of the year. Despite persistent challenges such as high construction costs, labor shortages, and tightening credit conditions, builders continue to navigate the industry landscape.

In April, overall housing starts increased by 2.2% to a seasonally adjusted annual rate of 1.40 million units. Within this figure, single-family starts saw a 1.6% increase to reach an 846,000 seasonally adjusted annual rate, although still 28.1% lower compared to the previous year. The multifamily sector, including apartments and condos, experienced a 3.2% increase to an annualized pace of 555,000 units.

 

NAHB Chief Economist Robert Dietz highlighted the impact of the Federal Reserve's financial tightening and its expected effect on mortgage rates. He stated, "As the Federal Reserve nears the end of its tightening of financial conditions, we expect mortgage rates to moderate in the months ahead, and this will lead to a gradual improvement in single-family production."

Despite these challenges, the industry remains resilient. Single-family permits increased by 3.1% to an 855,000 unit rate, although down 21.2% from the previous year. Multifamily permits, however, decreased by 7.7% to an annualized pace of 561,000 units.

While the number of single-family homes under construction decreased by 16% since the peak in May 2022, there has been a surge in apartment construction. Currently, 977,000 apartments are under construction, marking the highest level since September 1973.

The gradual improvement in single-family housing starts provides hope for the housing market's continued recovery. Builders' perseverance in navigating challenges such as supply chain disruptions and labor shortages plays a vital role in meeting the increasing demand for homes.

https://www.nahb.org/news-and-economics/press-releases/2023/05/single-family-starts-show-gradual-improvement-in-april