Housing Starts Continued to Fall in December

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Housing starts further slowed in December, falling 1.4% compared with November, according to estimates from the U.S. Census Bureau and U.S. Department of Housing and Urban Development.

Year over year, housing starts were down 21.8%.

Starts of detached, single-family homes were at an annual rate of 909,000, an increase of 11.3% compared with November.

Starts of multifamily properties (five units or more per building) were at an annual rate of 463,000, a decrease of 18.9% compared with the previous month. 

An estimated 1.553 million housing units were started in 2022, a decrease of 3.0% compared with 2021.

Building permits fell 1.6% compared with November to an annual rate of 1.330 million.

Permits were down 29.9% compared with December 2021.

Permits for single‐family homes in December were at a rate of 730,000, a decrease of 6.5% compared with November.

Permits for multifamily dwellings were at a rate of 555,000 in December, an increase of 7.1% compared with the previous month.

An estimated 1.649 million housing units were authorized by building permits in 2022, a decrease of 5.0% compared with 2021.

Housing completions were at a seasonally adjusted annual rate of 1.411 million, a decrease of 8.4% compared with November but up 6.4% compared with December 2021.

“While the number of single-family homes under construction is stabilizing as builders cut production, multifamily construction continues to hit new records,” says Odesa Kushi, deputy chief economist for First American, in a statement. “Starts are exceeding completions and there are a record 926,000 multifamily units under construction. More multifamily supply may ultimately put some downward pressure on rents over the next year or so.”

Kushi says although homebuilder sentiment increased in January, due to lower mortgage rates, “general perceptions among builders remain poor.”

“As mortgage rates moderate and with the spring season around the corner, it’s possible that the worst of the impact to sales is behind us,” she says.

Jerry Konter, chairman of the National Association of Home Builders (NAHB), says although single-family starts were up on a monthly basis in December, the housing market is poised for further slowdown in 2023.

However, Konter expects “a sustainable decline for mortgage rates in the second half of this year, which should lead to a housing recovery in 2024.”

Photo: Annie Gray

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