Housing Data Weakens in April

Permit authorizations, a future indicator for housing construction, inched up just 0.3% from March. Permit authorizations for single-family homes fell 3.8% but authorizations for apartment-style homes of five units or more rose 11.1%.

“Housing production declined in April due to rising prices and limited availability of lumber and other building materials,” said Robert Dietz, chief economist at the National Association of Home Builders. “Single-family housing starts are up 28% on a year-to-date basis; however, the numbers are distorted by the weak readings of the spring of 2020.”

“Builder confidence remains solid in spite of supply-side challenges, according to the NAHB/Wells Fargo Housing Market Index (HMI),” said Dietz. “However, after peaking at a level of 90 last November, builders report growing concerns over increasing lumber and other construction costs, as well as delays in obtaining building materials. Rising interest rates will also erode housing affordability in 2021, though rates have fallen back in recent weeks. Builders also report growing concerns about a more challenging regulatory environment that could limit land development volume.”

NAHB is predicting that early 2021 weakness in single-family home construction will give way to the “long-run post-Great Recession trend as the year progresses.”

Regional data compared to the previous month shows permits up 8.4% in the Northeast and 3.9% in the South. Permits declined 9.9% in the Midwest and 4.1% in the West.

Housing starts grew 6.2% in the Northeast and 9.0% in the West, but plunged 34.8% in the Midwest and 11.5% in the South.