(NAHB) In a sign that lower mortgage rates continue to boost the housing market, single-family production surpassed the million mark for the second straight month in December.
Overall housing starts fell 4.3% in December to a seasonally adjusted annual rate of 1.46 million units following an unusually strong reading the month before, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
The December reading of 1.46 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 8.6% to a 1.03 million seasonally adjusted annual rate, but are up 15.8% compared to a year ago. The multifamily sector, which includes apartment buildings and condos, increased 8% to a 433,000 pace.
Total housing starts for 2023 were 1.41 million, a 9% decline from the 1.55 million total from 2022. Single-family starts in 2023 totaled 945,000, down 6% from the previous year. Multifamily starts in 2023 totaled 469,000, down 14.4% compared to the previous year.
“Mortgage rates steadily fell below 7% in December, and lower rates combined with a lack of existing inventory in most markets helped to keep single-family production above a one million-unit annual pace,” said Alicia Huey, chairman of the National Association of Home Builders (NAHB) and a custom home builder and developer from Birmingham, Ala. “And the fact that our latest surveys showed a big increase in builder confidence is an indicator that we can expect housing starts to improve in the coming months. Overall, 2023 was a challenging year for new home construction as housing took a hit due to higher rates and tight monetary policy.”
“Moderating mortgage rates are expected to provide a boost to new home construction in 2024, but an uptick in building material prices and a shortage of buildable lots and skilled labor are serious challenges for home builders,” Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis. “A rise in single-family permits is a sign that we will see the single-family market pick up steam in the near future. However, due to tighter financing, the multifamily market will weaken.”
On a regional and year-to-year basis, combined single-family and multifamily starts are 20.1% lower in the Northeast, 10.7% lower in the Midwest, 5.5% lower in the South and 11.6% lower in the West.
Overall permits increased 1.9% to a 1.50 million unit annualized rate in December and are up 6.1% compared to December 2022. Single-family permits increased 1.7% to a 994,000 unit rate and up 32.9% compared to the previous year. Multifamily permits increased 2.2% to a 501,000 pace.
Looking at regional permit data on a year-to-year basis, permits are 21.3% lower in the Northeast, 14.1% lower in the Midwest, 9.4% lower in the South and 12.2% lower in the West.
Tagged with construction, NAHB