Housing starts, building permits and completed construction all decreased in December, but only by small percentages, according to the latest new residential construction data from the U.S. Census Bureau.
Housing starts in December were at a seasonally adjusted annual rate of 1,382,000, 1.4% below the November estimate of 1,401,000 and 21.8% below last year’s rate of 1,768,000.
Single‐family housing starts saw an increase of 11.3%, from 817,000 in November to 909,000. Multifamily starts, on the other hand, decreased by 19% to 463,000. Single and multifamily starts were higher in the Northeast by 5%, but were 5.7% lower in the Midwest, 1.6% lower in the South and 7.2% lower in the West.
Total housing starts for 2022 came to an estimated 1,553,300, 3% below the 1,601,000 from 2021. Single-family starts totaled 1,010,000, down 10.6% from the previous year. Multifamily starts total was up 14.5% compared to the previous year, and exceeded a 500,000 annual pace for the first time since the Great Recession.
Danushka Nanayakkara-Skillington, the National Association of Home Builders’ (NAHB) assistant vice president for forecasting and analysis, commented that “Starts began on a strong footing in early 2022 but fell back in the latter part of the year as higher costs led to a pause in home building activity and affordability conditions worsened for homebuyers.”
Building permits in December were at a seasonally adjusted annual rate of 1,330,000, 1.6% below the November rate of 1,351,000 and 29.9% below last year’s rate of 1,896,000. Single‐family permits also decreased by 6.5% from November’s 781,000 to 730,000, and are down 34.7% compared to last year. Multifamily permits saw the only increase at 5.3% to 600,000.
Total building permits for 2022 were at 1,649,400, 5% below the 2021 total of 1,737,000. Looking at regional permit data on a YoY 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.
“The decline in single-family permits indicates that builders are slowing construction activity as interest rates have spiked in recent months,” added Nanayakkara-Skillington.
Finished construction was at a seasonally adjusted annual rate of 1,411,000, 8.4% below the revised November estimate of 1,540,000, but 6.4% above last year’s rate of 1,326,000. Single‐family finished construction saw a decrease of 8%, from 1,092,000 in November to 1,005,000. Multifamily finished construction was at a rate of 385,000.
Total finished construction for 2022 came to 1,392,300, 3.8% above the 2021 total of 1,341,000.
Jerry Konter, chairman of the NAHB commented that, “Even though single-family starts are up on a monthly basis, permits indicate that the housing market will slow down further in 2023. We expect a sustainable decline for mortgage rates in the second half of this year, which should lead to a housing recovery in 2024.”
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