NAHB: Supply-Side Limitations Hurt Housing Starts in July

The July reading includes a 4.5% decrease in single-family starts to a 1.11 million seasonally adjusted annual rate, while the multifamily sector, which includes apartment buildings and condos, decreased 13.1% to a 423,000 pace.

“The latest starts numbers reflect declining builder sentiment as they continue to grapple with high building material prices, production bottlenecks and labor shortages,” said Chuck Fowke, NAHB’s chairman. “Policymakers need to prioritize the U.S. supply chain for items like building materials to ensure builders can add additional inventory the housing market desperately needs.”

On a regional and year-to-date basis through July, combined single-family and multifamily starts are 27.7% higher in the Northeast, 20.8% higher in the Midwest, 18.5% higher in the South and 27.7% higher in the West, when compared to the same year-ago period.

Overall permits increased 2.6% to a 1.64-million-unit annualized rate in July. Single-family permits decreased 1.7% to a 1.05-million-unit rate. Multifamily permits increased 11.2% to a 587,000 pace.

On a year-to-date basis, regional permits are 24.9% higher in the Northeast, 23.0% higher in the Midwest, 25.9% higher in the South and 28.2% higher in the West.

“The decline in single-family permits indicates that builders are slowing construction activity as costs rise,” said Danushka Nanayakkara-Skillington, NAHB’s assistant VP for forecasting and analysis. “Starts began the year on a strong footing, but in recent months some projects have been forced to pause due to both the availability and costs of materials.”