Privately owned housing starts in December decreased 1.4% month over month and 21.8% year over year to a seasonally adjusted annual rate of 1,382,000, according to the U.S. Census Bureau and the Department of Housing and Urban Development. The December rate for units with five units or more was 463,000.
Single-family housing starts in December increased 11.3% month over month to a rate of 909,000. Doug Duncan, chief economist at Fannie Mae, says the surge in single-family starts “was due almost entirely” to a 96.9% increase in single-family construction in the Northeast. Duncan says Fannie Mae believes the surge in single-family starts is likely “an anomaly.”
Cumulatively in 2022, an estimated 1,553,300 housing units were started. The estimate represents a 3% decrease from the 2021 figure of 1,601,000.
“As we’ve seen buyers pull back from recent highs, builders have realized it no longer makes sense to build as many homes as they did over the past couple of years, especially speculative homes,” says Zonda chief economist Ali Wolf. “Housing starts are realigning with home sales. The slower spec building along with the more cautious tone in the market has resulted in a slower starts pace nationwide.”
Privately owned housing completions in December decreased 8.4% month over month to a seasonally adjusted annual rate of 1,411,000. Completions increased 6.4% on a year-over-year basis compared with December 2021. Single-family completions in December decreased 8% month over month to a rate of 1,005,000. The rate of completions for units in buildings with five units or more was 385,000 in December.
For the full year, an estimated 1,392,300 housing units were completed in 2022. The estimate represents a 3.8% increase from 2021.
Privately owned housing units authorized by building permits in December decreased 1.6% month over month to a seasonally adjusted rate of 1,330,000. The rate is 29.9% below the December 2021 rate. Single-family authorizations in December decreased 6.5% to 730,000. An estimated 1,649,4000 housing units were authorized by building permits in 2022, a 5% decrease from 2021.
“We think single-family permits, which declined nationally by 6.5% to a SAAR (seasonally adjusted annual rate) of 730,000 is likely more indicative of the broader trend in new-home construction,” Duncan says. “Therefore, while Q4 came in higher than expected, we continue to forecast a decline in starts over the coming quarters as elevated mortgage rates and a broader economic slowdown weigh on demand. Still, there is some upside risk to our forecast as mortgage rates have pulled back in recent weeks and the prices for many construction inputs have retreated from pandemic highs, potentially allowing builders to offer deeper price concessions to spur sales while still maintaining profit margins.”