New construction is struggling to keep pace with the insatiable demand of American homebuyers. Single-family housing starts increased slightly in February, but overall new construction fell behind as the volatile multifamily sector plummeted more than 25%.
Sizable growth in the construction labor workforce could be the silver lining in a disappointing month for housing starts. Builders are still hindered, however, by the rising cost of construction materials like softwood lumber and steel.
- Privately owned housing starts decreased 7% month-over-month in February
- Single-family housing starts increased 2.9%, but multifamily housing starts plummeted 26.1%
- Builders are mainly hindered by zoning issues, labor shortages, and lumber prices
Privately owned housing starts dropped by 7% from January’s 1.33 million to 1.24 million in February, according to the latest release from the U.S. Census Bureau. This is also down 4% from 1.29 million in February 2017.
But this decrease was due to a drop in multifamily building starts, as single-family housing starts increased 2.9% from 877,000 in January to 902,000 in February.
“All of the decline came from volatile the multifamily sector, which plummeted by 26.1%, the largest monthly drop since late 2016,” Nationwide Chief Economist David Berson said.
And new construction may not increase anytime soon. Privately owned housing units authorized by building permits decreased 5.7% from January’s 1.38 million to 1.3 million in February.
But one expert pointed out the construction industry could start seeing more activity after February’s increase in construction labor.
“The employment situation report, released earlier this month, reported an increase of nearly 7,000 residential construction jobs between January 2018 and February 2018. In fact, February was the best month for residential construction labor growth since August 2008,” First American Chief Economist Mark Fleming said.
View the original article at Housing Wire