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North American housing starts edge higher in April, but permits slip

[May 25, 2023]

There are some signs that US housing starts are due to recover but many challenges still lie ahead

US housing starts in April nudged above the revised March reading, remaining resilient in the face of economic headwinds at a seasonally adjusted annual rate (SAAR) of 1.401 million units, according to the US Census Bureau.

Single-family starts climbed 1.6% to their highest level of 2023 at 846,000 units. However, that reading lagged the year-ago pace of single-family starts by 28.1%.

Multifamily starts also ticked up, gaining 3.2% to 555,000 units. On an annual basis, that level lags the 2022 pace by 11.5%.

The rate of US housing starts is divided by region

April housing starts were divided sharply by region, gaining in the Midwest and West while falling in the Northeast and South. Total starts in the West boasted a 34.6% increase month over month, driven by a 59.5% surge in single-family starts. In the Midwest, total starts jumped 32.6% but featured a 20.5% drop in single family.

Starts in the Northeast and South fell 23.4% and 6.3% on a monthly basis, respectively. Drops in those regions were spread across both single and multifamily segments. Both single-family and multifamily starts declined on an annual basis in all regions.

Builder confidence in the single-family sector as measured by the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) climbed five points in May to a reading of 50. It’s the fifth straight monthly gain and the highest level since July 2022.

“New home construction is taking on an increased role in the marketplace because many homeowners with loans well below current mortgage rates are electing to stay put, and this is keeping the supply of existing homes at a very low level,” said Alicia Huey, NAHB chairman.

Building permits in April edged lower to 1.416 million units (SAAR), a 1.5% drop from the revised March level. Permits were down 21.1% from the April 2022 reading.

“Multifamily permits are down 23% year-over-year, and this indicates a slowdown for apartment construction is underway due to a tighter lending environment,” said Robert Dietz, NAHB chief economist.

Source:  National Association of Home Builders (NAHB)