Housing Starts Climb in February

Real estate signage in Malibu, Calif., on Sept. 24, 2021. (John Fredricks/The Epoch Times)

Construction of new houses increased by 6.8 percent in February in the United States, reversing a decline from the previous month and bringing the seasonally-adjusted annual rate of housing starts to 1.769 million.

This rebound in housing starts is the most drastic since 2006, and the magnitude of growth surpassed the monthly predictions of most experts (economists polled by The Wall Street Journal forecasted a growth in housing starts of only 3.8 percent).

Overall, housing starts in February 2022 were 22.3 percent higher than the same month in 2021, during which a wave of harsh winter weather delayed construction.

Since the duration of the brief CCP (Chinese Communist Party) virus recession, housing prices in the United States have risen drastically, achieving a peak increase of 19.3 percent in July 2021. At the same time that low mortgages and widespread remote work were encouraging more people to buy homes, institutional investors escalated their own investments in the real estate market, buying homes in cash in order to turn them into rental properties.

The effect of these simultaneous phenomena in the housing market is a state of limited supply and high competition among prospective buyers—factors which, in ordinary circumstances, would spur widespread construction of new homes.

However, new housing construction has intermittently failed to keep pace with the surging demand for houses, as a result of particular scarcities of the pandemic economy. While the exodus of urbanites from the coasts has turned inland cities such as Phoenix and Dallas into boomtowns, construction has been stymied by severe labor shortages and supply chain scarcities in construction materials. Last year, when crowded ports resulted in supply chain complications, shortages of lumber, metals, and other essential construction materials were felt throughout the industry, and the ripple effects of these supply chain issues persist to this day.

These factors have made contractors reluctant to build new houses even while prices are at record highs. Companies fear that supply chain issues and rising costs will hamper their ability to finish projects quickly, efficiently, and affordably.

However, the results from February are a sign that construction firms are finding ways around these issues. Though they may still be cautious about undertaking new projects with uncertain supply, the construction industry has reversed the fall in housing starts from last month, suggesting that it has found sufficient means to cope with scarcity in order to meet demand for new houses.