US housing starts plunge

National Association of Realtors (NAR) chief economist Lawrence Yun said housing starts had “collapsed” in January, with seasonally adjusted data suggesting no end in sight to the current inventory shortage.

He said developers were pulling back, if only temporarily, from the multifamily construction space due to rising apartment vacancy as a result of the oversupply of construction in recent years.

The US “greatly underproduced” housing in the decade prior to the outbreak of the COVID-19 pandemic, according to Yun, with that shortage still reverberating around the marketplace.

“The way to address the shortage is to incentivize construction,” he said. “However, some localities are choosing the wrong policies, such as rent control, NIMBYism, and raising impact fees, which will make the shortage worse and raise housing costs in the long run.”

Single-family starts tick upwards on yearly basis

Still, there was some room for optimism with single-family housing starts jumping by 22% on a year-over-year basis despite slipping by 4.7% compared with December.