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US housing starts unexpectedly on multifamily building

(Bloomberg)—New US home construction unexpectedly strengthened in December at its fastest pace in nine months, led by apartment projects and suggested builders had some success in meeting material and labor shortages.

According to government data released on Wednesday, residential starts rose 1.4% to 1.70 million annually, from a pace of 1.68 million in November. 16 lakh houses were commissioned for the whole of 2021, an increase of 15.6% from the previous year and the highest since 2006.

Applications for construction, a proxy for future construction, rose 9.1% in December to an annualized 1.87 million units, the highest since January last year. Permits in 2021 grew by 17.2% over the previous year.

Home prices have increased over the past year as potential buyers compete for a limited number of homes. Builders are rushing to replenish inventory, but supply chain challenges, high commodity prices and a lack of skilled labor have extended construction deadlines and increased backlogs.

Without enough ready homes to meet demand, housing affordability is set to deteriorate further in 2022. Mortgage rates are now at their highest levels in almost two years, which will make it more difficult for first-time homeowners looking to become one.

Stephen Stanley, chief economist at Amherst Pierpont Securities LLC, said, “To the extent that 2022 brings something new, the question will be whether higher home prices and/or rising mortgage rates will reduce demand enough to bring the market into better equilibrium.” Will give.” Said in a note.

Multifamily starts – which are volatile and include apartment buildings and condominiums – climbed 10.7% to 530,000, the fastest since February 2020.

single family home

The government report shows single-family starts down 2.3% in December at an annualized pace of 1.17 million units. At the same time, applications to build one family housing grew by 2%, the highest level since May.

Overall new home construction slipped by about 14% in the West and 1.9% in the South. Begins to move solidly to the northeast and mid-west.

Looking ahead, the Omicron variant and the associated spurt in COVID-19 cases may add to the problems already facing builders. With a slight dip in builder’s confidence in January, the homebuilding spirit is still intact.

The number of one-family housing units still under construction has soared to the highest level in nearly 15 years, extending a steady uptrend since June 2020.

—With assistance from Kristi Scheible and Olivia Rockman.

© 2022 Bloomberg LP

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