US Building Permits Fell 11.2% in November as Homebuilders Confidence Turns to Despair

US housing starts fell 0.5% month-over-month in November to a seasonally adjusted annual rate of 1.427 million units (consensus 1.395 million), single-unit starts fell even more, by 4.1% to 828,000. Total building permits declined much more than expected 11.2% month-over-month to a seasonally adjusted annual rate of 1.342 million (consensus 1.480 million), with permits for single-unit dwellings dropping by 7.1%. Affordability remains the major issue; mortgage demand remains near its lowest level since 1997.

Homebuilders’ confidence is all a low ebb as we saw with the NAHB housing market index falling to 31 in December (consensus 34) from 33 in November, the lowest level since mid-2012 with the exception of the spring of 2020.

The move suggests disruption and demographic influences.

United States Housing Starts November 2022

The keynote from the report was there no growth in single-unit starts in any regions nor any growth in permits (a leading indicator) in any region for single-unit dwellings.

  • US Total housing starts fell 0.5% month-over-month in November to a seasonally adjusted annual rate of 1.427 million units (consensus 1.395 million),
  • Single unit starts fell by 4.1% to 828,000.
  • The change in single-unit starts by region: Northeast (+15.1%); Midwest (-26.7%); South (-6.6%); and West (+16.0%).
  • Multi-family units (buildings with five units or more) starts were up 4.9% month-over-month, the highest since April.
  • The number of units under construction at the end of the period was flat month-over-month at a seasonally adjusted annual rate of 1.709 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 moved sharply higher (over 7%).

United States Building Permits November 2022

  • US Single unit starts fell by 4.1% to 828,000.
  • Total building permits declined 11.2% month-over-month to a seasonally adjusted annual rate of 1.342 million (consensus 1.480 million), with permits for single-unit dwellings dropping by 7.1%.
  • The change in single unit permits by region: Northeast (0.0%); Midwest (-9.1%); South (-7.2%); and West (-7.8%).
  • Multi-family units (buildings with five units or more) permits were down 16.4% month-over-month.
United States Building Permits
United States Building Permits MoM

Housing Completions

  • Privately‐owned housing completions in November were at a seasonally adjusted annual rate of 1,490,000. This is 10.8 percent (±15.8 percent)* above the revised October estimate of 1,345,000 and is 6.0 percent (±17.6 percent)* above the November 2021 rate of 1,406,000.
  • Single‐family housing completions in November were at a rate of 1,047,000; this is 9.5 percent (±12.9 percent)* above the revised October rate of 956,000.
  • The November rate for units in buildings with five units or more was 430,000

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 

From The TradersCommunity News Desk