2021 ended with more good news for home builders, with December seeing the third straight month of new residential construction increases, according to the latest report from the Commerce Department release Wednesday.
Growth was primarily driven by a 5% increase of multifamily structures, with the month seeing a 2.3% decrease in single family home construction. Looking at all of 2021, there was 15.6% increase in multifamily housing units versus 2020. Thus, these properties were a significant growth catalyst for new residential real estate in a market with staggering demand.
December’s report shows that are also no signs of slowing in the coming months for residential construction. Building permit applications increased 9.1% (6.5% higher than the same period in 2020), which was the most since the start of 2021 in January, and a 17.2% increase versus 2020.
Topline Numbers – December 2021:
Housing Starts – 1,702,000
Building Permits – 1,873,000
Housing Completions – 1,295,000
The Takeaway:
While the market continues to stay hot, and shows no signs of slowing, the pace of new home starts is still not keeping up with the estimated 5-plus million needed to meet consumer demand, according to realtor.com®.
“New construction maintained an unseasonably robust pace in December, reflecting strong homebuilder sentiment. The NAHB Market Index rose to a 2021 peak in December, as builders reported strong sales activity and expectations, driven by a generally upbeat outlook for homebuyer demand. However, December also saw the return of high lumber prices, which shot up from the summer low of $400 to over $1,100 per thousand board feet, adding to the cost of finished new homes.
“Permits rose 9.1% from November, and were 6.5% higher than December 2020, driven by double-digit gains in multifamily activity. Meanwhile, starts increased 1.4% from the prior month, to 1.68 million annualized units, and were up 2.5% from the prior year, as builders doubled-down on properties with five or more units. Completed homes, ready for sale, declined 8.7% from the prior month, and were 6.6% below December 2020. Nonetheless, the pace of single-family home completions increased 3.9% from the prior month, boosted by gains in the Northeast, South and West.” –George Ratiu, Manager of Economic Research at Realtor.com®
