CHICAGO – March 20, 2018 – Fewer new homes were in the pipeline in February as housing starts for combined multifamily and single-family homes plunged 7 percent month over month, the U.S. Commerce Department reported, with housing production at a seasonally adjusted annual rate of 1.24 million units.
"The fall in housing starts in February is a movement in the wrong direction," says Lawrence Yun, chief economist for the National Association of Realtors®. "The key to economic prosperity at this juncture of economic expansion is to produce more new homes. That will help with job creation and reduce the swift price appreciation in several markets."
A total of 1.2 million homes were constructed last year, which Yun calls "vastly inadequate," and the numbers for last month barely rose higher than year-ago levels. "It's not enough," Yun says. "While relaxing regulations on small-sized community banks may spur more construction loans for building, labor shortages in the industry continue to stunt overall activity."
Multifamily production plunged 26.1 percent in February to a seasonally adjusted annual rate of 334,000 units, while single-family starts eked out a modest 2.9 percent gain to 902,000 units.
Still, rising buyer demand along with record-low inventory has prompted calls from many in the real estate industry for builders to add more new homes.
Randy Noel, chairman of the National Association of Home Builders, says developers are trying to manage rising construction costs to keep home prices competitive. NAHB Chief Economist Robert Dietz says the uptick in single-family production in February follows the organization's 2018 forecast for gradual, modest strengthening in the new-construction market.
Combined single-family and multifamily home production rose by the highest amount in the Midwest last month, up 7.6 percent month over month. However, housing starts dropped 12.9 percent in the West, 7.3 percent in the South and 3.5 percent in the Northeast.
Source: National Association of Realtors® and National Association of Home Builders
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