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Housing starts rose in February, led by a robust increase in multifamily construction, the Department of Housing and Urban Development and the Census Bureau reported Thursday. Housing starts, including both multifamily and single-family, increased 6.8% last month and are up 22.3% over a year ago.
Broken out, activity in the multifamily sector, which includes apartment buildings and condos, rose by 9.3% to an annualized pace of 554,000 units. That marks the best pace since January 2020. Economists expect the multifamily sector to continue to show strength over the coming months.
Meanwhile, the seasonally adjusted annual rate for single-family starts increased by 5.7% to 1.22 million. Supply chain delays and cost issues, however, are limiting the pace of home building in many markets.
“Builders continue to start homes as the demand for new construction remains solid in a market lacking inventory of previously owned homes,” says Jerry Konter, chairman of the National Association of Home Builders. “However, construction costs are rising too quickly, which threatens housing affordability conditions in 2022 as interest rates rise.” Read more: Builder Confidence Dips on Rising Material Costs
In February, on a regional basis, combined single-family and multifamily housing starts were strongest in the Northeast, posting a 28.7% increase month over month, followed by a 15.3% increase in the Midwest and an 11.4% increase in the South. The West was the only region to register a decrease last month, with housing starts falling by 11.4%.