Amid a nationwide inventory shortage, construction rates jumped across the board from February to March.
Residential housing starts rose 19.4 percent to a seasonally adjusted annual rate of 1,739,000, according to a new sales report released Wednesday by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. That is also a 37 percent increased from March 2020.
“Home construction is booming, with housing starts in March at their highest level since June 2006,” Holden Lewis, the home and mortgage expert at NerdWallet, said in a statement. “Builders are breaking ground at a pace we haven’t seen since before the Great Recession, knowing that the demand is there. Not enough existing homes are for sale, so buyers are shopping for new homes, too.”
Building permits for new construction rose by 2.7 percent to a seasonally adjusted annual rate of 1,766,000 while housing completions rose 16.6 percent to a seasonally adjusted rate of 1,580,000.
However, a recent report from Freddie Mac found that builders would need to construct 3.8 million single-family homes just to catch up with existing demand.
Single-family construction is up even more — 15.3 percent for starts, 4.6 percent for permits and 5.3 percent for completions. The numbers reflect pent-up demand for homes amid historically low inventory rates. Frustrated with high prices and competition with buyers making higher and higher offers, many are turning instead toward construction to get the homes they want.
“An extremely tight supply of existing homes for sale combined with still-favorable mortgage rates and an improving labor market will continue to support demand for new housing,” Doug Duncan, the chief economist at Fannie Mae, said in a statement.
“Our tracking of homebuyer migration patterns also indicates that there continues to be an above-normal pace of moving from some larger urban areas and towards suburban regions, which also helps support single-family construction. Suburban multifamily housing construction is also benefitting from this trend.”