Supply-Chain Obstacles Slow Down Construction Permitting

Persisting supply shortages and operational hurdles are causing a major drop in new construction permitting, according to Realtor.com.

September saw the most drastic decrease with the lowest issued permits in a year, specifically for multifamily permits, which fell 21% on a monthly basis.

The drop in permits was driven mainly by a decrease in multifamily housing units, though fewer single-family homes were permitted as well. Multifamily permits fell 21% on a monthly basis, while single-family permits decreased nearly 1%. The number of permits issued in September was the lowest it has been since a year ago, and all regions saw a downturn in permitting activity except for the Midwest.

New construction on multifamily buildings also decreased in September, with a 5% downturn, though single-family starts remained unchanged from the previous month. It was the slowest pace for housing starts since April, driven by downturns in the Northeast and South.

“New home starts declined in September after an initial rebound in August, amid continued concerns about delivery timelines,” said Kelly Mangold, a principal with RCLCO Real Estate Consulting. Shortages of building materials and labor mean that home builders are having a tough time completing projects as quickly as they had in the past. The number of housing projects completed in September fell nearly 5% from the previous month, slipping to the lowest level in over a year.