MReport June 2022

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M REPORT | 57 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Stalled Construction Projects Up Nearly 50% Census data finds that a spike in the cost of raw materials and continued supply chain issues have driven up the number of home construction projects that were authorized but not started. N ew housing construc- tion is booming, but due to market constraints, stalled projects are also up compared to pre-pandemic times. In a new article written by Jacob Channel, LendingTree's Senior Economic Analyst, he finds that strong housing de- mand has provided builders with plenty of opportunities to begin construction on new homes, but labor shortages and global supply chain issues have made complet- ing many construction projects difficult. LendingTree gathered data for this report from the U.S. Census Bureau from 2019 and 2021 to examine how four homebuilding- related variables changed over that time. The variables LendingTree tracked were: • The number of housing units authorized by building permits • The number of authorized housing units that started con- struction (otherwise referred to as housing starts) • The number of authorized housing units that didn't start construction (stalled construc- tion projects) • The number of authorized housing units that completed construction (otherwise referred to as housing completions) As a whole, LendingTree dis- covered that while the number of homes that were built increased from 2019 to 2021, home construc- tion projects that were authorized but not started became far more prevalent. Key findings were as follows according to LendingTree: • Nationally, the number of housing units authorized by building permits increased by 25% from 2019 to 2021. The South saw the largest growth in units authorized by permits (27%), while the Northeast saw the smallest (19%). • From 2019 to 2021, authorized housing units that started con- struction rose by 24% nation- wide. Housing starts increased the most in the Midwest (27%) and the least in the Northeast (19%). • The number of housing units that were authorized but didn't start construction increased by 47% nationwide from 2019 to 2021. These increased most prominently in the Northeast, where they more than dou- bled. In the West, they rose by the least (19%). This growing number of stalled construc- tion projects highlights how rising labor and raw material costs have negatively impacted builders. • Though the number of completed housing units rose by 7% nationwide from 2019 to 2021, the number fell in the Northeast and West. In the Northeast and West, completed units fell by 9% and 2%, respec- tively. Conversely, the South and Midwest saw increases of 14% and 8%, respectively. Looking forward, LendingTree does not expect much relief soon, as other factors are pressing down homebuilding. The pandemic will continue to have residual effects on the market as it relates to labor, the supply chain, and demand. Raw material costs also remain higher than they were in 2019. "Despite these difficulties, the news isn't all bad for homebuild- ers. Even if rising mortgage rates weaken buyer demand and labor and supply issues persist, home- builders will likely have plenty of opportunities to construct and sell new housing units as the year progresses," Channel wrote. "And though the road ahead may be bumpy, that doesn't mean it won't ultimately be rewarding for many of those in the construction business."

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