Mortgage News March 29, 2023
Construction activity in the US saw a boost last month with both housing permit activity and residential construction starts on the rise, according to the US Census Bureau and the Department of Housing and Urban Development. In February, permits for residential housing units were issued at a seasonally adjusted annual rate of 1.524 million units, up 13.8% from the previous month. Single-family permits rose 7.6% to 777,000 units, while multifamily permits increased by 24.3% to 560,000 units. Despite the gains, the figures remain below the February 2022 rate of 1.857 million units, with single-family permits down 35.5% year-over-year.
The seasonally adjusted rate of housing starts rose to 1.450 million units, indicating a 9.8% increase as compared to January. Again, the gains were largely driven by the multifamily sector, which saw a 24.1% increase in starts compared to a 1.1% increase in single-family starts. There was a 31.6% decrease in single-family starts as compared to February 2022, while multifamily starts grew 14.3%. Robert Dietz, chief economist for the National Association of Home Builders, called February’s single-family production rate “anemic,” citing high construction costs, elevated mortgage rates, and tightening credit conditions.
The rate of unit completions rose 12.2% in February to an annual rate of 1.557 million, with 147,600 of those being single-family homes. However, the number of single-family units under construction continued to decline as more homes are being completed than starting construction. During the month of February, construction began on 58,600 single-family homes, and 77,100 units were completed. Year-to-date figures show that 116,500 single-family homes have started construction, and 147,600 units have been completed.
While the rise in construction activity is a positive sign for the industry, it remains to be seen if the gains will continue or if the challenges faced by builders will dampen future growth.
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