Washington, D.C.—Constrained housing affordability conditions due to elevated interest rates, rising construction costs and labor shortages led to a reduction in housing production in March, according to the National Association of Home Builders (NAHB).
Overall housing starts decreased 11.4% in March to a seasonally adjusted annual rate of 1.32 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
The March reading of 1.32 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 14.2% to a 940,000 seasonally adjusted annual rate and are down 9.7% compared to March 2024. The multifamily sector, which includes apartment buildings and condos, decreased 3.5% to an annualized 384,000 pace.
“The drop in March housing starts is a clear signal that affordability pressures are intensifying,” said Buddy Hughes, chairman of the NAHB and a home builder and developer from Lexington, N.C. “Elevated mortgage rates and rising construction costs are making it increasingly difficult to deliver homes at price points accessible to entry-level buyers. We’re seeing demand soften as more potential home owners are priced out of the market.”
Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis, added, “March’s decline in housing production reflects the ongoing struggle to balance construction costs with the need for affordable housing. High material prices and labor shortages continue to challenge our ability to build homes that meet the budget constraints of many families. Without targeted policy support, addressing the affordability crisis remains an uphill battle.”
On a regional and year-to-date basis, combined single-family and multifamily starts were 8.6% higher in the Northeast, 3.3% higher in the Midwest, 8.5% lower in the South and 10.6% higher in the West.
Overall permits increased 1.6% to a 1.48-million-unit annualized rate in March. Single-family permits decreased 2% to a 978,000-unit rate. Multifamily permits increased 9.3% to a 504,000 pace.
Looking at regional permit data on a year-to-date basis, permits were 24.7% lower in the Northeast, 4.7% higher in the Midwest, 0.4% higher in the South and 8.8% lower in the West.
In March, the number of single-family homes under construction is at 632,000 homes while the count of apartments under construction has fallen to 759,000 units.