• Kolton Morrison

Housing Starts are Down

What is a housing start?

A housing start is when a builder has started the construction of a residential home. They are recorded month to month as a key economic indicator. A housing start is not counted until the construction begins on the foundations of the structure like laying the concrete.

Coming into this week housing starts were expected to be down around 2%, but BOOM, they are down to 9.5% according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. And in the single family residence category they are down 13.4%. Woah, why is that? Well builders are searching for labor and lumber. Right now labor is hard to come by because people are being paid to stay home cashing in on that (f)unemployment game. So it is difficult for builders to find the hard workers to complete builds. Also lumber is tough to come by as well as we all know commodity prices have gone up. Supply and demand, baby!

The tough part of all this is that the numbers are probably better than reality. 15% of builders who have laid concrete to build on have no

t actually built on the foundation yet, so true numbers are most likely even worse. And to put some frosting on the cupcake, home completions are down about 5% as well.

Looking forward to future construction, let us just focus on single family residences. Permits to build single family residences are also down to 3.8%. “The decline in single-family permits indicates that builders are slowing construction activity as costs rise,” said NAHB Chief Economist Robert Dietz. “While housing starts were strong at the beginning of the year, due to home builders constructing homes that were sold pre-construction, higher costs and limited availability of building materials have now paused some projects.” “The number of single-family homes permitted but not started construction continued to increase in April, rising to 131,000 units. This is 47% higher than a year ago, as building material cost increases and delays slow some home building,” according to the NAHB. What does this mean? Expect home prices to continue to rise.

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