Construction On Single-Family Homes Increases By 11% Despite A Decline In Both Building Permits And Completed Homes.

According to new data released by the US Census Bureau on Thursday, the seasonally adjusted annual rate of housing starts fell to 1,382,000, 1.4% below levels recorded in November.

As reported by the Census Bureau, the annual rate of housing starts was 1,382,000 in January, which is 1.4% lower than the levels recorded in November and 21.8% lower than the levels seen in December 2021. According to the report, the number of new homes built in 2022 was estimated at 1,553,300, down from the 1,601,000 annualized rate in 2021.

Single-family home construction was a bright spot, increasing by 11.3% from November, while multifamily construction fell by 19% to a rate of 473,000.

Building permits for new homes declined by 1.6% to a seasonally adjusted annual rate of 1,330,000 in February, which is 29.9% lower than the December 2021 rate of 1,896,000. Permits to construct about 1,649,400 homes were issued all throughout 2022, down 5% from 2021.

As an annual rate, December's completions were 1,411,000 units, which was 8.4 percent below the revised November estimate of 1,540,000 but 6.4 percent above December 2021 levels. The Census Bureau estimates that 1,392,300 homes were built in 2022, which is 3.8% more than the 1,341,000 homes built in 2021.

Some experts predicted that the slowdown in production of single-family homes would last until 2023, despite the encouraging increase in production.

Jerry Konter, chairman of the National Association of Home Builders, said in a statement, "Even though single-family starts are up on a monthly basis, permits indicate that the housing market will slow down further in 2023." The housing market should begin to improve in 2024 as "we anticipate a sustainable decline in mortgage rates in the second half of this year."

As builders respond to falling housing demand due to high mortgage interest rates, the National Association of Home Builders (NAHB) has pointed to the decline in permitting as evidence that a further drop in housing starts is imminent.

The National Association of Home Builders (NAHB) assistant vice president for forecasting and analysis, Danushka Nanayakkara-Skillington, said in a statement that the falling number of single-family building permits shows that builders are slowing construction activity as interest rates have spiked in recent months.

Starting construction on new homes "began on a strong footing in early 2022 but retreated in the latter half of the year as higher costs caused a pause in home building activity and affordability conditions worsened for home buyers."