Steel Markets

Housing Starts Spike Significantly in March

April 16, 2021

Housing construction rebounded in March as demand for newly built homes was spurred by tight existing-home inventory and low mortgages interest rates.

house Construction starts for privately-owned houses soared 19.4% from February to March, and 37% from a year ago, to a seasonally adjusted annual rate of 1.74 million units Starts for single-family homes leapt 15.3% from the previous month, while apartment and condo buildings with five units or more rocketed 30%. Compared to March 2020, single-family starts were up nearly 41%.

Permit authorizations in March rose 2.7% from February to a SAAR of 1.76 million and jumped 30.2% from a year ago. Permits for single-family homes rose 4.6%, 2-4 units rose 25.5%, and permits for buildings of five units or more fell 3.6%. Compared to March 2020, permit authorizations for single-family homes were 35.6% higher.

Builder confidence is strong, but high material costs and supply chain challenges could impede building momentum, said Chuck Fowke, chairman of the National Association of Home Builders.

“Demand remains solid due to low mortgage interest rates and a thin level of inventory in the resale market, which is spurring the need for additional supply,” said NAHB Chief Economist Robert Dietz. “The test for the industry this year will be balancing growth and higher construction costs, given ongoing housing affordability challenges.

“The NAHB forecast includes some weakening for single-family home building at the start of 2021 (off recent highs last fall), with a return to the long-run post-Great Recession trend as the year progresses,” said Dietz.

On a regional basis compared to February, housing starts were 64% higher in the Northeast, 122.8% higher in the Midwest and 13.5% higher in the South. Starts dropped 13.6% in the West.

Permits by region were 8% lower in the Northeast, 2% higher in the Midwest, up 6.4% in the South and flat in the West.