Breaking an eight-year trend, there have been more single-family homes under construction in recent months than multifamily units, according to the National Association of Home Builders, which predicted additional gains in single-family construction in 2022.
Despite some cooling earlier this year, the continued strength of single-family construction in 2021 means that there are now 28 percent more single-family homes under construction than there was a year ago, said Robert Dietz, Chief Economist for the Washington, DC-based NAHB.
“These gains mean single-family completions will increase in 2022, bringing more inventory to market despite a 19 percent year-over-year rise in construction material costs and longer construction times,” Dietz said.
Ongoing single-family and multifamily housing production accelerated in November, due to strong demand, with overall housing starts increasing 11.8 percent to a seasonally adjusted annual rate of 1.68 million units, according to U.S. government figures.
Despite inflation concerns and ongoing production bottlenecks, builder confidence in the market for newly built single-family homes also edged higher for the fourth consecutive month on strong consumer demand and limited existing inventory, the NAHB added.
“While demand remains strong, finding workers, predicting pricing and dealing with material delays remains a challenge,” said Dietz. “Building has increased but the industry faces constraints, namely cost/availability of materials, labor and lots. And while 2021 single-family starts are expected to end the year 24 percent higher than the pre-Covid 2019 level, we expect that higher interest rates in 2022 will put a damper on housing affordability.”