Housing Starts Fell in December But Were Stronger Than Expected


Housing starts fell 4.3% in December compared with November but were up 7.6% compared with December 2022, according to estimates from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.

Starts reached a seasonally adjusted annual rate of 1.46 million – better than expected but still below the previous month’s results.

Starts of detached, single‐family homes were at a rate of 1.027 million, a drop of 8.6% compared with November.

Starts of multifamily dwellings (5 units or more per building) was 417,000, an increase of 7.5% compared with the previous month.

Building permits were at a seasonally adjusted annual rate of 1.495 million, an increase of 1.9% compared with November and an increase of 6.1% compared with December 2022.

Permits for single‐family homes were at a rate of 994,000, an increase of 1.7% compared with November.

Permits for multifamily units were at a rate of 449,000 in December, an increase of 1.4% compared with the previous month.

An estimated 1.469 million housing units were authorized by building permits in 2023 – down 11.7% compared with 2022.

Housing completions in December were at a seasonally adjusted annual rate of 1.574 million,  an increase of 8.7% compared with November and an increase of 13.2% compared with December 2022.

An estimated 1.452 million housing units were completed in 2023, an increase of 4.5% compared with 2022.

“While monthly housing starts data can oscillate a lot, the general trend we are looking for is an increase in starts, particularly for single-family homes,” says Selma Hepp, chief economist for CoreLogic, in a statement. “[The] increase in building permits over the course of 2023 and generally more positive housing outlook for 2024 due to lower mortgage rates are all positive signs that homebuilders are cautiously optimistic about building new homes.”

In a separate statement, Odeta Kushi, deputy chief economist for First American, notes that “single-family permits, a leading indicator of future starts, reached the highest level since May 2022.”

“This is consistent with the latest builder survey, which showed an uptick in builder sentiment and future sales expectations,” Kushi says. “Single-family completions increased 8.4 percent compared with last month and 6.1 percent from one year ago. That’s more supply added to the housing stock – good news for a housing market in need of more homes.

“Among the homebuilder sentiment index’s components, sales expectations in the next six months surged by 12 points into positive territory, reaching the highest level since July 2023,” Kushi says. “Lower mortgage rates are enticing buyers off the sidelines and fueling builder optimism. Additionally, a limited supply of existing homes continues to prompt a shift towards new home purchases.

“The jump in single-family permits and the upward trend in single-family housing starts alongside improving builder sentiment is an encouraging sign for the housing market,” Kushi adds. “While headwinds remain, notably ongoing affordability constraints, the green shoots of a housing recovery have emerged alongside lower mortgage rates.”

Photo: Jens Behrmann

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