Stalled Construction Projects Up 47% Nationwide Since Pre-Pandemic, Even As Home Constructions Rise
The COVID-19 pandemic has had an uneven impact on new home construction.
On the one hand, strong housing demand has provided builders with plenty of opportunities to begin construction on new homes. On the other hand, labor shortages and global supply chain issues have made completing many construction projects difficult.
To better illustrate the specific impacts that the pandemic has had on construction, LendingTree analyzed the latest U.S. Census Bureau data to examine how four homebuilding-related variables changed from 2019 to 2021 (by region and total):
- The number of housing units authorized by building permits
- The number of authorized housing units that started construction (otherwise referred to as housing starts)
- The number of authorized housing units that didn’t start construction (stalled construction projects)
- The number of authorized housing units that completed construction (otherwise referred to as housing completions)
In doing so, we found that while the number of homes that were built increased from 2019 to 2021, home construction projects that were authorized but not started became far more prevalent.
TABLE OF CONTENTS
- Key findings
- Growth rate in number of housing units authorized by building permits
- Growth rate in number of housing units that started construction
- Growth rate in number of authorized housing units that didn’t start construction
- Growth rate in number of housing units that completed construction
- Homebuilding difficulties may persist for some time
- 3 tips for buying a home in today’s pricey market
- Methodology
Key findings
- 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 construction rose by 24% nationwide. 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 doubled. In the West, they rose by the least (19%). This growing number of stalled construction 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%, respectively. Conversely, the South and Midwest saw increases of 14% and 8%, respectively.
Growth rate in number of housing units authorized by building permits
| Region | Number of housing units authorized by building permits (2019) | Number of housing units authorized by building permits (2021) | % change, 2019 to 2021 |
|---|---|---|---|
| Northeast | 141.2 | 167.9 | 19% |
| Midwest | 184.8 | 232.0 | 26% |
| South | 710.3 | 903.5 | 27% |
| West | 349.8 | 426.5 | 22% |
| Total | 1,386.0 | 1,729.90 | 25% |
Source: LendingTree analysis of U.S. Census Bureau Building Permits Survey and Survey of Construction data. Notes: Housing unit figures are presented in the thousands. Regions may not add to the total due to rounding.
Growth rate in number of housing units that started construction
| Region | Number of housing units that started construction (2019) | Number of housing units that started construction (2021) | % change, 2019 to 2021 |
|---|---|---|---|
| Northeast | 114.8 | 136.5 | 19% |
| Midwest | 169.4 | 215.5 | 27% |
| South | 684.8 | 848.1 | 24% |
| West | 321.0 | 400.8 | 25% |
| Total | 1,290.0 | 1,601.0 | 24% |
Source: LendingTree analysis of U.S. Census Bureau Building Permits Survey and Survey of Construction data. Note: Housing unit figures are presented in the thousands. Regions may not add to the total due to rounding.
Growth rate in number of authorized housing units that didn’t start construction
| Region | Number of authorized housing units that didn't start construction (2019) | Number of authorized housing units that didn't start construction (2021) | % change, 2019 to 2021 |
|---|---|---|---|
| Northeast | 17.4 | 35.3 | 103% |
| Midwest | 15.0 | 23.2 | 55% |
| South | 95.0 | 144.6 | 52% |
| West | 54.3 | 64.6 | 19% |
| Total | 181.7 | 267.7 | 47% |
Source: LendingTree analysis of U.S. Census Bureau Building Permits Survey and Survey of Construction data. Note: Housing unit figures are presented in the thousands.
Growth rate in number of housing units that completed construction
| Region | Number of housing units that completed construction (2019) | Number of housing units that completed construction (2021) | % change, 2019 to 2021 |
|---|---|---|---|
| Northeast | 122.5 | 110.9 | -9% |
| Midwest | 170.6 | 184.2 | 8% |
| South | 637.2 | 727.0 | 14% |
| West | 324.8 | 318.9 | -2% |
| Total | 1,255.10 | 1,341.00 | 7% |
Source: LendingTree analysis of U.S. Census Bureau Building Permits Survey and Survey of Construction data. Note: Housing unit figures are presented in the thousands.
Homebuilding difficulties may persist for some time
With mask mandates ending, businesses reopening and more people returning to work, it can be tempting to assume that the impacts of the COVID-19 crisis have dissipated. But this isn’t true. Many of the pandemic’s effects still linger and can cause issues for homebuilders.
For example, while the unemployment rate has returned to lower pre-pandemic levels, the labor force participation rate remains below where it was in 2019. This means there may be fewer potential employees on the market for construction companies. Not only that, but wages for construction industry workers are increasing at their fastest rate in 40 years.
Outside of labor challenges, rising raw material costs are also likely to continue to hurt homebuilding. For instance, lumber costs are still considerably higher than in 2019, owing to disruptions in global supply chains. And the recent Russian invasion of Ukraine has put more upward pressure on raw material and fuel costs, further exacerbating many of the challenges builders face.
Despite these difficulties, the news isn’t all bad for homebuilders. Even if rising mortgage rates weaken buyer demand and labor and supply issues persist, homebuilders will likely have plenty of opportunities to construct and sell new housing units as the year progresses. 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.
3 tips for buying a home in today’s pricey market
Though an increase in the housing supply spurred by new construction could help bring down home prices, there’s no getting around how expensive it is to buy a home currently. With that in mind, here are three tips to help buyers navigate today’s hot housing market.
- Shop around for a mortgage. Though rates are rising, it’s still possible to save money by shopping around for a lender before applying for a mortgage. Because different lenders may offer different rates to the same borrower, shopping around can help you get the lowest possible rate on your mortgage. The lower the rate you get, the more expensive a home you can likely afford.
- Consider different types of mortgages. If you’re struggling to come up with a down payment or if you’ve got a poor credit score, you may still be able to secure a mortgage. For example, some may be able to qualify for a mortgage insured by the Federal Housing Administration (FHA) with a down payment as low as 3.5% and a credit score as low as 580. Similarly, those who live in certain rural areas may qualify for a U.S. Department of Agriculture (USDA) loan with no down payment and a score as low as 640.
- Look for your dream home in unexpected places. Depending on where you look, you may be able to find a house for less than you initially expected. If you’re in the market for a new home but are struggling to find something affordable, consider checking out the U.S. Department of Housing and Urban Development’s (HUD) list of properties for sale, as they are often sold at discounted prices. You can also consider leveraging your ability to work remotely to move to a cheaper area where home prices are less expensive.
Methodology
LendingTree analyzed 2019 and 2021 data from the U.S. Census Bureau Building Permits Survey and Survey of Construction. These two monthly surveys focus on new privately owned residential housing unit construction.
The term “housing unit” refers to single-family homes and homes part of a multifamily housing structure.
The states included in each region are as follows:
- Northeast: Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont
- Midwest: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin
- South: Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia and West Virginia
- West: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming