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 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

Custom Home Building Share Declines Slightly

2022-12-08T09:15:08-06:00

By Ashok Chaluvadi on December 8, 2022 • According to data from the Census Bureau’s Survey of Construction (SOC), custom homes accounted for 17.6 percent of new single-family homes started—down slightly from the 17.8 percent recorded in 2021 and the lowest the annual custom home share has been since the 2005 re-design of the SOC.  The custom home market consists of contractor-built and owner-built houses—homes built one at a time for owner occupancy on the owner’s land, with either the owner or a builder acting as a general contractor. The alternatives are homes built for sale (on the builder’s land, often in subdivisions, with the intention of selling the house and land in one transaction) and homes built for rent.  In 2021, 77.0 percent of the single-family homes started were built for sale, and 5.4 percent were built for rent. Although the custom-home percentage declined slightly in 2021, more single-family homes were started; so, the number of custom homes started in 2021 (199,683) was actually higher than the number of custom homes started in 2020 (176,499). The quarterly published statistics show that the custom-home share of single-family starts stayed relatively flat through the second quarter of 2022. Although the quarterly statistics are more timely, they lack the geographic detail available in the annual data set. When analyzed by the 9 census divisions, the annual data show that the highest custom home share in 2021 was 40.1 percent New England Division. In the South Atlantic Division, on the other hand, the share was only 11.5 percent. In the East South-Central Division, 38.8 percent of new homes started were contractor-built or owner-built houses, followed by the East North-Central Division at 32.8 percent and 31.5 percent in the Middle Atlantic Division. In the West North Central Division 20.3 percent of new homes started where custom homes, followed by 15.0 percent in the West South-Central Division, 14.7 percent in the Pacific Division, and 12.9 percent in the  Mountain Division. Related ‹ Share of Bedrooms in New Homes in 2021Tags: construction, economics, eye on the economy, home building, housing economics, starts

Custom Home Building Share Declines Slightly2022-12-08T09:15:08-06:00

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