2022 Ends With A Decline in Single-Family Starts For the First Time Since 2011

2023-01-19T12:09:54-06:00

Led by a decline in multifamily production, overall housing starts decreased 1.4% to a seasonally adjusted annual rate of 1.38 million units in December, according to data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Also of note, single-family housing starts ended the year down more than 10%, marking the first annual decline since 2011. The December reading of 1.38 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts increased 11.3% to a 909,000 seasonally adjusted annual rate. The three-month moving average (a useful gauge given recent volatility) inched up to 862,000 starts, as charted below. However, single-family housing starts are down 25% compared to December 2021. The multifamily sector, which includes for-rent apartment buildings and condos, decreased 19% to a 473,000 pace for 2+ unit construction in December. The three-month moving average for multifamily construction has been a solid 541,000-unit annual rate. One a year-over-year basis, multifamily construction is down 14.9%. Total housing starts for 2022 were 1.55 million, a 3% decline from the 1.60 million total from 2021. Single-family starts in 2022 totaled 1.01 million, down 10.6% from the previous year. Multifamily starts (2+) in 2022 were up 15.1% compared to the previous year and exceeded a 500,000 annual pace for the first time since the Great Recession. On a regional and year-to-year basis, combined single-family and multifamily starts are 5% higher in the Northeast, 5.7% lower in the Midwest, 1.6% lower in the South and 7.2% lower in the West. As an indicator of the economic impact of housing, there are now 769,000 single-family homes under construction. This is 0.1% lower than a year ago. There are currently 943,000 apartments under construction, up 24.9% compared to a year ago (755,000). Total housing units now under construction (single-family and multifamily combined) is 12.3% higher than a year ago. Overall permits decreased 1.6% to a 1.33 million unit annualized rate in December and are down 29.9% compared to December 2021. Single-family permits decreased 6.5% to a 730,000 unit rate and are down 34.7% compared to December 2021. Multifamily permits increased 5.3% to a 600,000 unit pace. Total permits for 2022 were 1.65 million units, a 5% decline from the 1.74 million unit total from 2021. Single-family permits in 2022 totaled 972,000 unit rate, down 12.9% from the previous year. Multifamily permits in 2022 were up 9.0% compared to the previous year. Looking at regional permit data on a year-to-year basis, permits are 13.6% lower in the Northeast, 3.4% lower in the Midwest, 2.4% lower in the South and 8.3% lower in the West. Related ‹ Remodeling Market Sentiment Weakened in Fourth Quarter but Remains PositiveTags: economics, home building, housing, multifamily, single-family, starts

2022 Ends With A Decline in Single-Family Starts For the First Time Since 20112023-01-19T12:09:54-06:00

Single-Family Permits Decreased in November 2022

2023-01-17T09:20:28-06:00

Over the first eleven months of 2022, the total number of single-family permits issued year-to-date (YTD) nationwide reached 921,626. On a year-over-year (YoY) basis, this is 10.5% below the November 2021 level of 1,029,208. Year-to-date ending in November, single-family permits declined in all four regions. The South posted a decline of 8.4%, while the West region reported the steepest decline of 13.9%. The Northeast declined by 10.2% and the Midwest declined by 13.6% in single-family permits during this time. On the other hand, multifamily permits posted increased in all but one region, Northeast (-1.4%). Permits were 25.2% higher in the South, 18.0% higher in the Midwest, and 5.6% higher in the West. Between November 2021 YTD and November 2022 YTD, five states and the District of Columbia saw growth in single-family permits issued. New Mexico recorded the highest growth rate during this time at 37.5% going from 5,083 permits to 6,989. Forty-five states reported a decline in single-family permits during this time with Colorado posting the steepest decline of 27.9% declining from 31,741 permits to 22,900. The ten states issuing the highest number of single-family permits combined accounted for 63.4% of the total single-family permits issued. Year-to-date, ending in November, the total number of multifamily permits issued nationwide reached 624,128. This is 14.8% ahead of the November 2021 level of 543,508. Between November 2021 YTD and November 2022 YTD, 37 states and the District of Columbia recorded growth, while 13 states recorded a decline in multifamily permits. Georgia led the way with a sharp rise (141.7%) in multifamily permits from 11,385 to 27,520 while Delaware had the largest decline of 57.5% from 1,235 to 525. The ten states issuing the highest number of multifamily permits combined accounted for 63.3% of the multifamily permits issued. At the local level, below are the top ten metro areas that issued the highest number of single-family permits. Metropolitan Statistical Area Single-Family Permits: Nov-22 (Units #YTD, NSA) Houston-The Woodlands-Sugar Land, TX                                                                                      45,584 Dallas-Fort Worth-Arlington, TX                                                                                      41,275 Phoenix-Mesa-Scottsdale, AZ                                                                                      25,831 Atlanta-Sandy Springs-Roswell, GA                                                                                     25,278 Austin-Round Rock, TX                                                                                      20,589 Charlotte-Concord-Gastonia, NC-SC                                                                                      17,900 Orlando-Kissimmee-Sanford, FL                                                                                      15,110 Tampa-St. Petersburg-Clearwater, FL                                                                                     14,785 Nashville-Davidson–Murfreesboro–Franklin, TN                                                                                      14,523 Jacksonville, FL                                                                                     13,345 For multifamily permits, below are the top ten local areas that issued the highest number of permits. Metropolitan Statistical Area  Multifamily Permits: Nov-22 (Units #YTD, NSA) New York-Newark-Jersey City, NY-NJ-PA                                                                                   43,165 Dallas-Fort Worth-Arlington, TX                                                                                   30,980 Houston-The Woodlands-Sugar Land, TX                                                                                   26,012 Austin-Round Rock, TX                                                                                 21,855 Los Angeles-Long Beach-Anaheim, CA                                                                                   19,959 Atlanta-Sandy Springs-Roswell, GA                                                                                   18,964 Washington-Arlington-Alexandria, DC-VA-MD-WV                                                                                   18,410 Seattle-Tacoma-Bellevue, WA                                                                                   18,405 Phoenix-Mesa-Scottsdale, AZ                                                                                   17,149 Minneapolis-St. Paul-Bloomington, MN-WI                                                                                 14,802 Related ‹ Material Shortages Ease, With Notable ExceptionsTags: home building, multifamily, single-family, state and local markets, state permits

Single-Family Permits Decreased in November 20222023-01-17T09:20:28-06:00

Multifamily Construction Continues to Expand Outside Metro Core Areas

2022-12-23T08:16:38-06:00

By Jesse Wade on December 23, 2022 • The most recent Home Building Geography Index (HBGI) shows that multifamily home building has continued to experience strong growth since the start of the pandemic. Due to the low single-family housing inventory and elevated unaffordability of single-family housing caused by high house prices and higher mortgage rates, demand for multifamily housing has remained solid over the past year. Except for the large metro outlying county market, all other markets had higher growth rates in 2022 when compared to 2021. The growth rate in large metro outlying counties went down from 44.1% in the third quarter of 2021 to 31.0% in the third quarter of 2022. The largest yearly increase in multifamily growth rate was in micro counties which experienced as 15.3 percentage point increase in growth rate, from 4.2% in the third quarter of 2021 to 19.5% in the third quarter of 2022. The smallest yearly increase was 7.1 percentage points which occurred in the large metros core county market, increasing from 9.8% to 16.9% over the year. Even though the large metro core county market featured the smallest increase in growth rate compared to last year, that region continued to dominate market share of the multifamily market. The multifamily market share has changed slightly from pre-pandemic levels. Despite the large metro core counties continuing to have the largest market share, its market share has been slowly decreasing since the onset of the pandemic. The largest increase in market share has been in large metros suburban counties and small metros core counties. Multifamily construction has slowly expanded out of the core counties of large metros into less densely populated areas as individuals and families move out of the city. The large metro core county market made up 38.4% of the multifamily market in the third quarter of 2022, down 3.3 percentage points from the fourth quarter of 2019. The small metro core county market grew 2.2 percentage points from 20.8% in the fourth quarter of 2019 to 23.0% in the third quarter of 2022. The Q3 2022 HBGI data can be found at http://nahb.org/hbgi. Related ‹ Nine Percent of New Homes Are TeardownsTags: exurbs, HBGI, home building geography index, multifamily, suburban

Multifamily Construction Continues to Expand Outside Metro Core Areas2022-12-23T08:16:38-06:00

Single-Family Production Continues to Decline, Multifamily Permits Weakening

2022-12-20T09:18:53-06:00

Single-family housing starts continued to fall in November, with the pace of construction down 32% since February when mortgage rates began to rise. The housing market continues to weaken because stubbornly high construction costs and elevated interest rates are harming housing affordability. And with the count of multifamily units under construction reaching a near 50-year high, multifamily permit growth is weakening. Overall housing starts decreased 0.5% to a seasonally adjusted annual rate of 1.43 million units in November, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The November reading of 1.43 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 4.1% to an 828,000 seasonally adjusted annual rate. Year-to-date, single-family starts are down 9.4%. Single-family starts are down on falling affordability conditions and lingering supply-chain issues, particularly for electrical transformers. For the last four months, there have been more single-family homes that completed construction than have been started over the past four months, per the non-seasonally adjusted estimates. The November data shows there were 25,500 more single-family homes completed than started for the month, thus pushing down the number of new homes under construction. Overall permits decreased 11.2% to a 1.34 million unit annualized rate in November. Single-family permits decreased 7.1% to a 781,000 unit rate. Multifamily starts, which includes apartment buildings and condos, increased 4.9% to an annualized 599,000 pace in November. Multifamily permits decreased 16.4% to an annualized 561,000 pace, the lowest reading for apartment permits since September 2021. We are forecasting declines for apartment construction in 2023 due to the large amount of supply in the construction pipeline, as well as tightening commercial real estate finance conditions. The number of multifamily units under construction for November was 932,000; this is the highest number since December 1973. The number of single-family units under construction has fallen for six consecutive months, declining to 777,000 homes in November. On a regional and year-to-date basis, combined single-family and multifamily starts are 1.3% higher in the Northeast, 0.8% higher in the Midwest, 0.6% higher in the South and 7.0% lower in the West. Looking at regional permit data on a year-to-date basis, permits are 5.6% lower in the Northeast, 0.5% lower in the Midwest, 0.6% lower in the South and 6.5% lower in the West. Related ‹ Reflecting a Weakening Housing Market, Builder Confidence Declined Every Month in 2022Tags: home building, housing, multifamily, single-family, starts

Single-Family Production Continues to Decline, Multifamily Permits Weakening2022-12-20T09:18:53-06:00

Single-Family Permits Continues On A Downward Trend in October 2022

2022-12-16T19:15:39-06:00

Over the first ten months of 2022, the total number of single-family permits issued year-to-date (YTD) nationwide reached 865,815. On a year-over-year (YoY) basis, this is 8.7% below the October 2021 level of 948,321. Year-to-date ending in October, single-family permits declined in all four regions. The South posted a modest decline of 6.8%, while the Midwest and the West regions reported the steepest decline of 11.6%. The Northeast declined by 9.7% in single-family permits during this time. On the other hand, multifamily permits posted increased in all four regions. Permits were 27.7% higher in the South, 17.8% higher in the Midwest, 9.1% higher in the West, and 2.4% higher in the Northeast. Between October 2021 YTD and October 2022 YTD, seven states saw growth in single-family permits issued. New Mexico recorded the highest growth rate during this time at 39.2% going from 4,718 permits to 6,567. Forty-three states and the District of Columbia reported a decline in single-family permits during this time with Colorado posting the steepest decline of 26.0% declining from 29,358 permits to 21,726. The ten states issuing the highest number of single-family permits combined accounted for 63.5% of the total single-family permits issued. Year-to-date, ending in October, the total number of multifamily permits issued nationwide reached 575,671. This is 17.4% ahead of the October 2021 level of 490,172. Between October 2021 YTD and October 2022 YTD, 39 states and the District of Columbia recorded growth, while 11 states recorded a decline in multifamily permits. Georgia led the way with a sharp rise (168.7%) in multifamily permits from 9,237 to 24,818 while Delaware had the largest decline of 61.5% from 968 to 373. The ten states issuing the highest number of multifamily permits combined accounted for 63.5% of the multifamily permits issued. At the local level, below are the top ten metro areas that issued the highest number of single-family permits. Metropolitan Statistical Area Single-Family Permits: Oct-22 (Units #YTD, NSA) Houston-The Woodlands-Sugar Land, TX                                                                                      42,826 Dallas-Fort Worth-Arlington, TX                                                                                      39,154 Phoenix-Mesa-Scottsdale, AZ                                                                                      24,470 Atlanta-Sandy Springs-Roswell, GA                                                                                     23,805 Austin-Round Rock, TX                                                                                      19,582 Charlotte-Concord-Gastonia, NC-SC                                                                                      16,806 Orlando-Kissimmee-Sanford, FL                                                                                      14,099 Tampa-St. Petersburg-Clearwater, FL                                                                                     13,733 Nashville-Davidson–Murfreesboro–Franklin, TN                                                                                      13,594 Jacksonville, FL                                                                                     12,551 For multifamily permits, below are the top ten local areas that issued the highest number of permits. Metropolitan Statistical Area  Multifamily Permits: Oct-22 (Units #YTD, NSA) New York-Newark-Jersey City, NY-NJ-PA                                                                                   40,527 Dallas-Fort Worth-Arlington, TX                                                                                   28,844 Houston-The Woodlands-Sugar Land, TX                                                                                   24,121 Austin-Round Rock, TX                                                                                  20,505 Los Angeles-Long Beach-Anaheim, CA                                                                                   18,600 Seattle-Tacoma-Bellevue, WA                                                                                   17,181 Atlanta-Sandy Springs-Roswell, GA                                                                                   17,018 Washington-Arlington-Alexandria, DC-VA-MD-WV                                                                                   16,892 Phoenix-Mesa-Scottsdale, AZ                                                                                   16,454 Minneapolis-St. Paul-Bloomington, MN-WI                                                                                   14,053 Related ‹ The Size of the Housing Shortage: 2021 DataTags: home building, multifamily, single-family, state and local markets, state permits

Single-Family Permits Continues On A Downward Trend in October 20222022-12-16T19:15:39-06:00

Apartment Absorption Rate Reaches 25-year High

2022-12-01T08:25:01-06:00

By Jesse Wade on December 1, 2022 • Data from the Census Bureau’s latest Survey of Market Absorptions of New Multifamily Units (SOMA) indicates that the multifamily market remained strong during the second quarter of 2022 due to high demand. With low single-family housing supply and increased unaffordability of for-sale housing, many would-be buyers have turned to or remained in the multifamily rental market. The absorption rate of unfurnished, unsubsidized apartments (the share rented out in the first three months following completion) rose by 15 percentage points to 77% in the second quarter of 2022. This is the highest absorption rate since the second quarter of 1997 (80%). The number of completions was up from the first quarter of 2022, from 52,170 to 77,110, while completions were down 8.6% from one year ago. The median asking rent for apartments increased from $1,683 in the second quarter of 2021 to $1,745 in the second quarter of 2022, a 4% increase over the year. This is the sixth consecutive quarter with a year-over-year increase in the median asking rent price. The condominium absorption rate (the share purchased in the first three months following completion) decreased from the first quarter of 2022 by 2 percentage points to 77% while condominium completions increased by 68% on a year-over-year basis from 3,158 in the second quarter of 2021 to 5,290 in the second quarter of 2022. The median asking sales price of condominiums rose to $791,000 in the second quarter of 2022, 113% higher than the median asking sales price of $371,000 in the second quarter of 2021. Related ‹ Construction Job Openings Peaked for Cycle?Tags: Absorption Rate, multifamily, SOMA

Apartment Absorption Rate Reaches 25-year High2022-12-01T08:25:01-06:00

Small Increase for Missing Middle Multifamily

2022-11-23T08:22:21-06:00

By Robert Dietz on November 23, 2022 • The missing middle construction sector includes development of medium-density housing, including townhouses, duplexes and other small multifamily properties. While townhouse construction has trended higher in recent quarters, the multifamily segment of the missing middle (apartments in 2 to 4 unit properties) has disappointed. For 2021, there were only 12,000 starts of such residences. This is flat from from 2020, during a period of time when most construction segments expanded. For the third quarter of 2022, there were just 5,000 2 to 4 unit housing unit construction starts. If accurate after revisions, that would mark the best quarter for this market segment since the middle of 2008. However, the gain is small, so it is not statistically significant. Nonetheless, it does match a pickup in permits for 2 to 4 unit production registered earlier in 2022. As a share of all multifamily production, 2 to 4 unit development is only 3.4% of the total. 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. Related ‹ 97% Built-for-Rent Multifamily Construction ShareTags: missing middle, multifamily

Small Increase for Missing Middle Multifamily2022-11-23T08:22:21-06:00

97% Built-for-Rent Multifamily Construction Share

2022-11-22T10:20:33-06:00

By Robert Dietz on November 22, 2022 • According to NAHB analysis of quarterly Census data, the count of multifamily, for-rent housing starts remained elevated during the third quarter of 2022. At 141,000 units started, this was the largest quarter for rental multifamily construction since the second quarter of 1986. The market share of rental units of multifamily construction starts increased to 97% as the already small condo market retreated on 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 third quarter, there were just 4,000 multifamily condo construction starts. This is just half the total from a year ago. An elevated rental share of multifamily construction is holding typical apartment size below levels seen during the pre-Great Recession period. According to third quarter 2022 data, the average square footage of multifamily construction starts ticked up to 1,092. The median declined to 998 square feet. Related ‹ New Single-Family Home Size Trending LowerTags: economics, home building, housing, mfbfr, multifamily, multifamily size

97% Built-for-Rent Multifamily Construction Share2022-11-22T10:20:33-06:00

Multifamily Developer Confidence Declines Significantly in the Third Quarter

2022-11-17T09:14:56-06:00

Confidence in the market for new multifamily housing declined significantly in the third quarter of 2022, according to results from the Multifamily Market Survey (MMS) released today by the National Association of Home Builders (NAHB). The MMS produces two separate indices. The Multifamily Production Index (MPI) decreased 10 points to 32 compared to the previous quarter while the Multifamily Occupancy Index (MOI) fell 15 points to 45. The MPI is a weighted average of three key elements of the multifamily housing market: construction of low-rent units-apartments that are supported by low-income tax credits or other government subsidy programs; market-rate rental units-apartments that are built to be rented at the price the market will hold; and for-sale units—condominiums. All three components saw decreases compared to the second quarter: the component measuring low-rent units fell nine points to 36, the component measuring market rate apartments dropped 13 points to 39 and the component measuring for-sale units declined 10 points to 23. The MOI measures the multifamily housing industry’s perception of occupancies in existing apartments. It is a weighted average of current occupancy indexes for class A, B, and C multifamily units, and can vary from 0 to 100, with a break-even point at 50, where lower numbers indicate decreased occupancy. The MOI fell 15 points to 45, the lowest level since the first quarter of 2010 (excluding COVID-19). Results for the MOI’s components weakened further from the previous quarter, with all three components falling below 50 for the first time since Q2 2020. The index for occupancy in class A and class B apartments both fell 16 points to 43 and 45, respectively, while the index for class C apartments dropped 11 points to 49. Even though the number of multifamily units under construction is at its highest level since December of 1973 and multifamily construction spending continues to increase, developers are starting to see the signs of a slowdown as evident by this quarter’s results. They are citing the high cost of materials and land along with weakening financing conditions given the recent monetary policy of the Federal Reserve as the main reasons for this decline in confidence, impacting affordable housing projects the most. Based on these factors, NAHB is now projecting a significant decline in multifamily starts in 2023. For complete results from the Multifamily Market Survey, including the history of each index and its components back to the survey’s inception in 2003, please visit NAHB’s MMS web page. Related ‹ Single-Family Housing Contraction Continues in OctoberTags: MMS, MOI, mpi, multifamily, multifamily market, multifamily market survey, multifamily occupancy index, multifamily production index, Multifamily starts, Occupancy Rates

Multifamily Developer Confidence Declines Significantly in the Third Quarter2022-11-17T09:14:56-06:00

Single-Family Permits Decline in September 2022

2022-11-15T09:18:27-06:00

Over the first nine months of 2022, the total number of single-family permits issued year-to-date (YTD) nationwide reached 800,424. On a year-over-year (YoY) basis, this is 7.4% below the September 2021 level of 864,184. Year-to-date ending in September, single-family permits declined in all four regions. The South posted a modest decline of 5.4%, while the Midwest region reported the steepest decline of 11.0%. The Northeast declined by 8.6% and the Western region reported an 10.0% decline in single-family permits during this time. On the other hand, multifamily permits posted increased in all four regions. Permits were 24.4% higher in the South, 22.5% higher in the Midwest, 11.3% higher in the West, and 6.0% higher in the Northeast. Between September 2021 YTD and September 2022 YTD, seven states saw growth in single-family permits issued. New Mexico recorded the highest growth rate during this time at 35.2% going from 4,432 permits to 5,993. Forty-three states and the District of Columbia reported a decline in single-family permits during this time with the District of Columbia posting the steepest decline of 36.9% declining from 328 permits to 207. The ten states issuing the highest number of single-family permits combined accounted for 63.7% of the total single-family permits issued. Year-to-date, ending in September, the total number of multifamily permits issued nationwide reached 516,955. This is 17.8% ahead of the September 2021 level of 438,700. Between September 2021 YTD and September 2022 YTD, 41 states and the District of Columbia recorded growth, while nine states recorded a decline in multifamily permits. Georgia led the way with a sharp rise (159.9%) in multifamily permits from 8,375 to 21,766 while Delaware had the largest decline of 75.1% from 962 to 240. The ten states issuing the highest number of multifamily permits combined accounted for 63.5% of the multifamily permits issued. At the local level, below are the top ten metro areas that issued the highest number of single-family permits. Metropolitan Statistical Area Single-Family Permits: Sep-22 (Units #YTD, NSA) Houston-The Woodlands-Sugar Land, TX                                                                                          39,590 Dallas-Fort Worth-Arlington, TX                                                                                          36,445 Phoenix-Mesa-Scottsdale, AZ                                                                                          23,399 Atlanta-Sandy Springs-Roswell, GA                                                                                          21,743 Austin-Round Rock, TX                                                                                          18,320 Charlotte-Concord-Gastonia, NC-SC                                                                                          15,496 Orlando-Kissimmee-Sanford, FL                                                                                          13,017 Nashville-Davidson–Murfreesboro–Franklin, TN                                                                                          12,781 Tampa-St. Petersburg-Clearwater, FL                                                                                          12,639 Jacksonville, FL                                                                                          11,395 For multifamily permits, below are the top ten local areas that issued the highest number of permits.  Metropolitan Statistical Area  Multifamily Permits: Sep-22 (Units #YTD, NSA) New York-Newark-Jersey City, NY-NJ-PA                                                                                        38,978 Dallas-Fort Worth-Arlington, TX                                                                                        24,071 Houston-The Woodlands-Sugar Land, TX                                                                                        21,070 Austin-Round Rock, TX                                                                                        18,682 Los Angeles-Long Beach-Anaheim, CA                                                                                        16,008 Washington-Arlington-Alexandria, DC-VA-MD-WV                                                                                        15,484 Seattle-Tacoma-Bellevue, WA                                                                                        15,208 Atlanta-Sandy Springs-Roswell, GA                                                                                        14,831 Phoenix-Mesa-Scottsdale, AZ                                                                                        13,816 Minneapolis-St. Paul-Bloomington, MN-WI                                                                                        12,617   Related ‹ Patios Continue to Substitute for Decks on New HomesTags: home building, multifamily, single-family, state and local markets, state permits

Single-Family Permits Decline in September 20222022-11-15T09:18:27-06:00

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