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Single-Family Production Continues to Sag

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, according to the National Association of Home Builders. The housing market continues to weaken because high construction costs, elevated interest rates and flagging demand are harming housing affordability. With the count of multifamily units under construction reaching a nearly 50-year high, multifamily permit growth is weakening.

Overall data

Overall housing starts decreased by 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 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 percent to an annualized 599,000 pace.

What NAHB is saying

“It’s no surprise that single-family starts are running at their lowest level since May 2020, given that builder sentiment has dropped for 12 consecutive months as builders remain fixated on rising building material costs and supply chain bottlenecks, with electrical transformers, in particular, being in short supply,” says Jerry Konter, chairman of NAHB.

“One important characteristic of the single-family housing market is that there have been more single-family homes that completed construction than have been started over the past four months,” says NAHB Chief Economist Robert Dietz. “The most recent data for November shows there were 25,500 more single-family homes completed than started, thus pushing down the number of new homes under construction.”

Data by region

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 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 by 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.