Unaffordable Real Estate Pushes US Housing Starts Down 1.4% and Building Permits Down 1.6% in December

US housing starts declined 1.4% month-over-month in December to a seasonally adjusted annual rate of 1.425 million (consensus 1.355 million). Total building permits fell 1.6% month-over-month to a seasonally adjusted annual rate of 1.330 million (consensus 1.370 million) and lowest level since May 2020. Affordability is the major issue; mortgage demand hovers near its lowest level since 1997. That said there was a positive element whereby new single-family starts increased by 11.3% month-over-month. Permits came as no surprise after recent earnings reports from KB Homes and Lennar forewarned that state at play.

The move suggests disruption and demographic influences.

United States Housing Starts December 2022

The keynote from the report was strong growth in single unit starts in all regions other than the Midwest. However, another fall in permits (a leading indicator) in all regions for single-unit dwellings underscores the issues.

  • US Total housing starts declined 1.4% month-over-month in December to a seasonally adjusted annual rate of 1.382 million units (consensus 1.355 million).
  • Compared to October 2021, housing starts fell 8.8%. 
  • The change in single unit starts by region: Northeast (+96.9%); Midwest (-4.2%); South (+4.4%); and West (+6.7%).
  • Multi-unit starts were down 18.9% month-over-month
  • The number of units under construction at the end of the period was up 0.6% month-over-month at a seasonally adjusted annual rate of 1.712 million.
United States Housing Starts
United States Housing Starts MoM

The housing market had been supported by low interest rates and increasing demand from people moving away from big cities due to the coronavirus crisis, but the momentum slowed with rising inputs amid supply constraints could limit production to ease a shortage of homes. Homebuilding activity has seen an adverse impact from sharply higher mortgage rates on buyer demand and builder sentiment. Further to rising mortgage rates, headwinds come from supply constraints and higher house prices. Rates are now sharply higher (over 7%).

United States Building Permits December 2022

  • US Building Permits Building permits dropped 1.6% month-over-month to a seasonally adjusted annual rate of 1.330 million (consensus 1.370 million).
  • Lowest since May 2020
  • Multi-segment dropped 3.4% month-over-month.
  • Permits were down in all regions Northeast (-5.9%); Midwest (0.0%); South (-3.4%); and West (-10.3%).
United States Building Permits
United States Building Permits MoM

Housing Completions

  • Privately‐owned housing completions in December were at a seasonally adjusted annual rate of 1,411,000. This is 8.4 percent (±16.5 percent) below the revised November estimate of 1,540,000 but is 6.4 percent (±11.4 percent) above the December 2021 rate of 1,326,000.
  • Single‐family housing completions in December were at a rate of 1,005,000; this is 8.0 percent (±11.6 percent) below the revised November rate of 1,092,000. The December rate for units in buildings with five units or more was 385,000.
  • An estimated 1,392,300 housing units were completed in 2022. This is 3.8 percent (±3.3 percent) above the 2021 figure of 1,341,000

Notice of methodology change: Beginning with the January 2022 New Residential Construction release on February 17, 2022, the monthly Building Permits Survey design will change from a representative sample to a cut‐off sample. This change will allow complete local and county data on new housing units authorized by permits to be published on a monthly basis going forward. For additional details on this change and the impact on New Residential Construction, see our FAQ document.

Source: US Census 

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