Friday, April 16, 2021

Comments on March Housing Starts

by Calculated Risk on 4/16/2021 09:36:00 AM

Earlier: Housing Starts increased to 1.739 Million Annual Rate in March

This was the highest level for starts since June 2006.

Total housing starts in March were above expectations, and starts in January and February were revised up. Single family starts increased in March, and were up 41% year-over-year (starts declined at the beginning of the pandemic). 

The volatile multi-family sector is up year-over-year (apartments were under pressure from COVID).

The housing starts report showed total starts were up 19.4% in March compared to February, and total starts were up 37.0% year-over-year compared to March 2020.

Low mortgage rates and limited existing home inventory have given a boost to single family housing starts.

The first graph shows the month to month comparison for total starts between 2020 (blue) and 2021 (red). 

Starts Housing 2019 and 2020Click on graph for larger image.

Starts were up 37.0% in March compared to March 2020.  The year-over-year comparison will be easy again in April, May and June.  

2020 was off to a strong start before the pandemic, and with low interest rates and little competing existing home inventory, starts finished 2020 strong.  Starts have started 2021 strong (February was impacted by the harsh weather).

Below is an update to the graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment).

These graphs use a 12 month rolling total for NSA starts and completions.

Multifamily Starts and completionsThe blue line is for multifamily starts and the red line is for multifamily completions.

The rolling 12 month total for starts (blue line) increased steadily for several years following the great recession - then mostly moved sideways.  Completions (red line) had lagged behind - then completions caught up with starts- then starts picked up a little again late last year, but have fallen off with the pandemic.

Single family Starts and completionsThe last graph shows single family starts and completions. It usually only takes about 6 months between starting a single family home and completion - so the lines are much closer. The blue line is for single family starts and the red line is for single family completions.

Single family starts are getting back to more normal levels, but I still expect some further increases in single family starts and completions on a rolling 12 month basis - especially given the low level of existing home inventory.