U.S. Housing Market Continues to Sag

December 22, 2022 8:42 am

The U.S. housing market continues to weaken, and now it’s suffering in two additional ways.

Firstly, single-family housing starts continued to fall in November, with the pace of construction down 32 percent since February when mortgage rates began to rise. This is according to data that the Washington, D.C.-based National Association of Home Builders (NAHB) published this month.

“And with the count of multifamily units under construction reaching a near 50-year high, multifamily permit growth is weakening. Overall housing starts decreased 0.5 percent to a seasonally adjusted annual rate of 1.43 million units in November, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau,” the NAHB said.

“The November reading of 1.43 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 4.1 percent to an 828,000 seasonally adjusted annual rate. Year-to-date, single-family starts are down 9.4 percent. The multifamily sector, which includes apartment buildings and condos, increased 4.9% to an annualized 599,000 pace.”

Among the NAHB’s other findings:

• On a regional and year-to-date basis, combined single-family and multifamily starts are 1.3 percent higher in the Northeast, 0.8 percent higher in the Midwest, 0.6 percent higher in the South and 7.0 percent lower in the West.

• Overall permits decreased 11.2 percent to a 1.34 million unit annualized rate in November. Single-family permits decreased 7.1 percent to a 781,000 unit rate. Multifamily permits decreased 16.4 percent to an annualized 561,000 pace, the lowest reading for apartment permits since September 2021.

• Looking at regional permit data on a year-to-date basis, permits are 5.6 percent lower in the Northeast, 0.5 percent lower in the Midwest, 0.6 percent lower in the South and 6.5 percent lower in the West.

• The number of multifamily units under construction for November is 932,000; this is the highest number since December 1973. The number of single-family units under construction has fallen for six consecutive months, declining to 777,000 homes in November.

Secondly, builder confidence in the market for newly built single-family homes posted its 12th straight monthly decline in December, dropping two points to 31, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released this week.

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“This is the lowest confidence reading since mid-2012, with the exception of the onset of the pandemic in the spring of 2020,” NAHB officials said in a statement.

NAHB members represent more than 140,000 members from the home building, remodeling, property management, subcontracting, design, and housing finance industries. Members said they will construct about 80 percent of the new housing units projected for this year.

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