Eye On Housing
Single-family housing showed strength in November despite supply-chain limitations for materials and ongoing access issues for labor and lots. Overall housing starts increased 11.8% to a seasonally adjusted annual rate of 1.68 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
The November reading of 1.68 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 increased 11.3% to a 1.17 million seasonally adjusted annual rate, and are up 15.2% year-to-date. The multifamily sector, which includes apartment buildings and condos, increased 12.9% to an annualized 506,000 pace.
Due to supply-chain effects, there are 152,000 single-family units authorized but not started construction—up 40.7% from a year ago.
In December, single-family builder confidence increased one point to a level 84 (after a three point gain in November) on strong buyer demand, according to the NAHB/Wells Fargo Housing Market Index (HMI). After peaking at a level of 90 in November 2021, builders have reported ongoing concerns over elevated lumber and other construction costs, as well as delays in obtaining building materials. The NAHB forecast projects growing labor shortages as the overall unemployment rate trends lower in the quarters ahead.
While the single-family sector cooled at the start of 2021, off the unsustainable seasonally adjusted pace of last Winter, recent readings, including the HMI, suggest ongoing stabilization. The November read of housing starts is consistent with this analysis. In fact, single-family permits showed strength in November, rising 2.7% and up 15.7% year-to-date.
Multifamily construction continues to expand strongly on declining vacancies and rising rents. After posting a slight decline in 2020, 5+ unit production is up 27.7% on a year-to-date basis. Even the “missing middle,” 2 to 4 unit production is showing gains, albeit up a smaller 10.1% year-to-date.
On a regional and year-to-date basis (January through November of 2021 compared to that same time frame a year ago), combined single-family and multifamily starts are 24.4% higher in the Northeast, 9.6% higher in the Midwest, 15.4% higher in the South and 19.4% higher in the West.
As an indicator of the economic impact of housing, there are now 752,000 single-family homes under construction. This is 28% higher than a year ago. There are currently 734,000 apartments under construction, up 11% from a year ago. Total housing units now under construction (single-family and multifamily combined) is 19% higher than a year ago.
Overall permits increased 3.6% to a 1.71 million unit annualized rate in November. Single-family permits increased 2.7% to a 1.03 million unit rate. Multifamily permits increased 5.2% to an annualized 609,000 pace.
Looking at regional permit data on a year-to-date basis, permits are 13.6% higher in the Northeast, 16.3% higher in the Midwest, 19.3% higher in the South and 22.4% higher in the West.
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