Housing construction in the United States is accelerating despite the high cost of materials caused by the COVID-19 pandemic, according to new data released by the US Census Bureau and the US Department of Housing and Urban Development (HUD). In their report, which focuses on new housing construction in June 2021, government agencies found that housing permits, construction start, housing under construction and completed housing units are significantly higher than they were in June 2020.
The report finds that nearly 1.6 million housing units were approved with permits last month, a 5% decrease from the previous month but a 23% increase from the number of permits issued in June 2020. Over 1.64 million residential units have now been put into operation in the construction process last month, up 6% from May and up 29% from June 2020
Overall, the number of residential units under construction increased by 14% in June 2021 compared to June 2020, which corresponds to a slight increase of 2% compared to May 2021 in June 2020, 1.4% less than in May 2021.
The figures show a different picture in the USA, depending on the construction phase. When issuing building permits and when construction begins, national growth is driven by activities in the south and west, while the north-east and mid-west lag well behind. For example, building permits for the south rose by 27% year-on-year, while permits in the north-east only increased by 11%. Likewise, the number of new housing units in the West increased by 45%, while the Midwest only saw an increase of 1% compared to June 2020.
For housing units currently under construction, all parts of the United States appear to be growing at the same time, with the Northeast at 10% lagging slightly behind the 13-16% in all other parts. In terms of housing completions, however, the northeast dominates the statistics with an increase of 56% compared to June 2020 and an increase of 54% compared to May 2021. In comparison, the south and west recorded increases in the order of 2% and 8% during the The Midwest saw a 13% decrease in June 2020 and 16% in May 2021.
The acceleration in housing construction is undoubtedly being driven by the persistent shortage of affordable housing across the country, according to a recent report by the National Association of Realtors that found the United States needed an additional 5.5 million units to cope with years of stagnation balance. However, the increase also occurred despite rising building material costs during the COVID-19 pandemic. As we noted last week, the price of wood only recently started to decline after rising 300% during the pandemic. Meanwhile, steel prices remain inflated, as shown by the US Bureau of Labor Statistics producer price index, with steel mill product prices nearly 90% higher and aluminum over 30% more expensive since the pandemic.
The news of the increased residential construction also came shortly after an AIA survey found that the demand for larger apartments had risen for the first time in five years.