2023 New Single-Family Starts by Census Division

2024-06-27T08:20:18-05:00

New single-family starts have trended higher since 2012, reaching a post-pandemic peak of 1,133,145 units in 2021. During 2022 and 2023, elevated housing prices and persistently high mortgage rates have dampened housing market activity. According to NAHB analysis of the 2023 Survey of Construction (SOC), new single-family starts decreased in 2023 for the second consecutive year. Nationally, 946,536 new single-family units started construction in 2023, 7% fewer than the number of units started in 2022. This marked the lowest annual count since the COVID-19 pandemic. Among all nine Census divisions, the South Atlantic, West South Central, and Mountain Divisions led the way with the most new single-family units started in 2023. These three divisions represent 20 states and Washington, D.C., approximately 41% of the United States, but account for more than two-thirds of the total new single-family housing starts. In addition, there were 93,831 new single-family units started in the Pacific Division (10% of total starts) and 75,690 in the East North Central Division (8%) in 2023. The other four divisions, including East South Central, West North Central, Middle Atlantic, and New England, accounted for the remaining 17% of the total new single-family housing starts. In 2023, six out of the nine divisions had negative annual growth rates. The New England Division was the only division that had a positive annual growth rate, while the Pacific and West South Central Divisions remained virtually unchanged in 2023. The Mountain Division reported the largest drop among the nine divisions with a 19% decrease, followed by the Middle Atlantic Division with a 17% decrease and the East North Central Division with a 12% decrease. Compared to the previous year, four out of the nine divisions had a deceleration in 2023: Mountain, Middle Atlantic, East North Central, and East South Central. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

2023 New Single-Family Starts by Census Division2024-06-27T08:20:18-05:00

First Quarter Multifamily Missing Middle Construction

2024-05-23T08:16:48-05:00

The missing middle construction sector includes development of medium-density housing, such as townhouses, duplexes and other small multifamily properties. The multifamily segment of the missing middle (apartments in 2- to 4-unit properties) has disappointed since the Great Recession. For the first quarter of 2023, there were just 43,000 2- to 4-unit housing unit construction starts. This is down 25% from a year prior. As a share of all multifamily production, 2- to 4-unit development was just above 6% of the total for the first quarter. In contrast, from 2000 to 2010, such home construction made up a little less than 11% of total multifamily construction. Construction of the missing middle has clearly lagged during the post-Great Recession period and will continue to do so without zoning reform focused on light-touch density. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

First Quarter Multifamily Missing Middle Construction2024-05-23T08:16:48-05:00

New Single-Family Home Size Decline Continues

2024-05-21T08:15:34-05:00

An expected impact of the virus crisis was a need for more residential space, as people use homes for more purposes including work. Home size correspondingly increased in 2021 as interest rates reached historic lows. However, as interest rates increased in 2022 and 2023, and housing affordability worsened, the demand for home size has trended lower. According to first quarter 2024 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area came in at 2,14 square feet, the lowest reading since the second half of 2009. Average (mean) square footage for new single-family homes registered at 2,343 square feet. Since Great Recession lows (and on a one-year moving average basis), the average size of a new single-family home is now just 1.2% higher at 2,387 square feet, while the median size is about 4.5% higher at 2,170 square feet. Home size rose from 2009 to 2015 as entry-level new construction lost market share. Home size declined between 2016 and 2020 as more starter homes were developed. After a brief increase during the post-covid building boom, home size is trending lower and will likely continue to do so as housing affordability remains constrained. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

New Single-Family Home Size Decline Continues2024-05-21T08:15:34-05:00

Custom Home Building Slowdown

2024-05-20T08:14:29-05:00

NAHB’s analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey indicates a slowing market for custom home building after a recent gain in market share. The subsector’s greater reliance on cash buyers has not shielded it from recent market softening, which in turn is putting downward pressure on home builder sentiment. There were 34,000 total custom building starts during the first quarter of 2024. This marks an almost 3% decline compared to the first quarter of 2023, which runs counter to many of the gains seen in other home building subsectors. Over the last four quarters, custom housing starts totaled 177,000 homes, a a more than 8% decline compared to the prior four quarter total (193,000). After share declines due to a rise in spec building in the wake of the pandemic, the market share for custom homes increased until 2023 and then entered a period of weakness. As measured on a one-year moving average, the market share of custom home building, in terms of total single-family starts, has fallen back to just under 18%. This is down from a prior cycle peak of 31.5% set during the second quarter of 2009 and a 21% local peak rate at the beginning of 2023. Note that this definition of custom home building does not include homes intended for sale, so the analysis in this post uses a narrow definition of the sector. It represents home construction undertaken on a contract basis for which the builder does not hold tax basis in the structure during construction. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

Custom Home Building Slowdown2024-05-20T08:14:29-05:00

Year-over-Year Gains for Single-Family Built-for-Rent Starts

2024-05-17T10:20:14-05:00

Single-family built-for-rent construction posted year-over-year gains as of the first quarter of 2024, as builders sought to add additional rental housing in a market facing ongoing, elevated mortgage interest rates. According to NAHB’s analysis of data from the Census Bureau’s Quarterly Starts and Completions by Purpose and Design, there were approximately 18,000 single-family built-for-rent (SFBFR) starts during the first quarter of 2024. This is 20% higher than the first quarter of 2023, albeit with favorable comps due to a weak start of 2023. Over the last four quarters, 80,000 such homes began construction, which is almost a 16% increase compared to the 69,000 estimated SFBFR starts in the four quarters prior to that period. The SFBFR market is a source of inventory amid challenges over housing affordability and downpayment requirements in the for-sale market, particularly during a period when a growing number of people want more space and a single-family structure. Single-family built-for-rent construction differs in terms of structural characteristics compared to other newly-built single-family homes, particularly with respect to home size. However, investor demand for single-family homes, both existing and new, has cooled with higher interest rates. Nonetheless, builders continue to build smaller projects of built-for-rent homes for their own operation. Given the relatively small size of this market segment, the quarter-to-quarter movements typically are not statistically significant. The current four-quarter moving average of market share (8%) is nonetheless higher than the historical average of 2.7% (1992-2012). Importantly, as measured for this analysis, the estimates noted above include only homes built and held by the builder for rental purposes. The estimates exclude homes that are sold to another party for rental purposes, which NAHB estimates may represent another three to five percent of single-family starts based on industry surveys. The Census data notes an elevated share of single-family homes built as condos (non-fee simple), with this share averaging more than 3% over recent quarters. Some, but certainly not all, of these homes will be used for rental purposes. Additionally, it is theoretically possible some single-family built-for-rent units are being counted in multifamily starts, as a form of “horizontal multifamily,” given these units are often built on a single plat of land. However, spot checks by NAHB with permitting offices indicate no evidence of this data issue occurring. Nonetheless, demand by investors for single-family rental units, new and existing, has cooled in recent quarters as financial conditions remain tight. This will continue to cool some investor demand for SFBFR housing. With the onset of the Great Recession and declines for the homeownership rate, the share of built-for-rent homes increased in the years after the recession. While the market share of SFBFR homes is small, it has clearly expanded. Given affordability challenges in the for-sale market, the SFBFR market will likely retain an elevated market share even as the sector cools in the quarters ahead. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

Year-over-Year Gains for Single-Family Built-for-Rent Starts2024-05-17T10:20:14-05:00

Slowing Multifamily Building Market Holds Elevated Built-for-Rent Share

2024-05-17T11:15:32-05:00

According to NAHB analysis of quarterly Census data, the count of multifamily, for-rent housing starts declined significantly during the first quarter of 2024. For the quarter, 80,000 multifamily residences started construction. Of this total, 75,000 were built-for-rent. This marks a notable 39% decline from the first quarter of 2023 for the multifamily built-for-rent category. The market share of rental units of multifamily construction starts was flat at a still elevated 96% for the first quarter as the already small condo market remained held back due to higher interest rates. In contrast, the historical low share of 47% was set during the third quarter of 2005, during the condo building boom. An average share of 80% was registered during the 1980-2002 period. For the first quarter, there were just 5,000 multifamily condo unit construction starts. An elevated rental share of multifamily construction is holding typical apartment size below levels seen during the pre-Great Recession period. According to first quarter 2024 data, the average square footage of multifamily construction starts was relatively unchanged at 1,042 square feet. The median increased slightly to 1,042 square feet. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

Slowing Multifamily Building Market Holds Elevated Built-for-Rent Share2024-05-17T11:15:32-05:00

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