Construction of new single-family homes is up in 2021 compared to last year, but a new report shows that construction could be even higher than it is now if supply was able to keep up with demand.
According to a new report from the Department of Housing and Urban Development and the Census Bureau, new single-family home construction fell by 3.9% in October from September’s totals.
The reason for the decline in October was supply chain issues, according to the National Association of Home Builders. That’s been a constant theme throughout the year.
“The rising count of homes permitted but that have not yet started construction is a stark reminder to policymakers to fix the supply chain so that builders can access a steady source of lumber and other building materials to keep projects moving forward,” NAHB Chairman Chuck Fowke said.
Despite the slowing pace of construction in October, construction of new single-family homes is up 16.7% year-to-date. However, that’s a decline from the pace seen in September when construction was up 20.5% year-to-date.
As NAHB Chief Economist Robert Dietz notes, the demand for new homes is there, but homebuilders aren’t able to build as quickly as they’d like to.
“Single-family permit data has been roughly flat on a seasonally adjusted basis since June due to higher development and construction costs,” Dietz said. “Demand remains solid but housing affordability is likely to decline in 2022 with rising interest rates.”
According to NAHB analysis, there are 152,000 single-family houses permitted that have yet to begin construction, up 43.4% from a year ago.