Read next: Biden takes action on housing affordability crisis
“We expect new home construction to remain relatively strong compared to existing sales in the near term due to an ongoing backlog of orders from new homes sold but not yet started, attributable to the ongoing material and labor shortages that have caused builders to postpone projects and decline new orders,” Duncan said. “Mortgage rates, now at their highest level in more than a decade, will likely take a larger toll on starts later in the year, which may be partially reflected in not only the 3.2% decline in permits but also the National Association of Home Builders’ survey results showing significantly lower demand in May.”
Privately-owned housing units authorized by building permits were at an annualized rate of 1.82 million. Of this number, single-family permits were 1.11 million, and multifamily authorizations were 656,000. Housing completions posted a 5.1% month-over-month decline to 1.30 million in April.
Kelly Mangold, principal at RCLCO Real Estate Consulting, said the Ukraine war, rising energy costs, lingering supply chain impacts, elevated levels of inflation, and Fed actions will likely slow the US economy’s growth, but the robust appetite for new homes will continue.
“However, barring a significant spillover of hostilities outside Ukraine, the US economy is likely to continue its recovery in 2022 and beyond, which bodes well for the housing industry. The for-sale housing supply has remained tight during the entirety of the pandemic, and despite the somewhat uncertain economic conditions – demand for additional new housing remains strong,” Mangold said.