Housing starts, a measure of new residential construction, declined in March, down 17.2% from a year ago. This data measures multi- and single-family construction activity each month. The Census Bureau measures housing starts on the date of construction groundbreaking, providing a proxy for future new construction inventory.
Housing starts have increased since recent declines during the Covid-19 pandemic. However, a large percentage of current housing starts growth is attributable to multi-family construction, comprising nearly 40% of new housing starts.
Additionally, annual single-family housing starts remain more than 200,000 units below the 40-year median. Following the Global Financial Crisis, many homebuilders grew increasingly hesitant to build homes that could not be immediately occupied or sold. But current housing starts remain well-below historical medians and point towards future long-term home inventory pressure.
Despite historically low housing starts, builder confidence continues to improve. According to the National Association of Home Builders (NAHB), builder confidence increased across all regions of the US in early 2023, while homebuilder stocks continue to gain momentum.
Housing starts data can help us gauge potential future inventory growth as housing starts progress to completion within each region.
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