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Housing starts, permits and completions all posted declines in December with increased production of single-family homes the lone bright spot for the month, according to data released Thursday by the U.S. Census Bureau.
Housing starts clocked in at a seasonally adjusted annual rate of 1,382,000, according to the census bureau, 1.4 percent below the levels recorded in November and 21.8 percent below the numbers seen in December 2021. An estimated 1,553,300 housing units were started in 2022, the report said, 3 percent lower than the 2021 rate of 1,601,000.
Housing starts for single-family homes proved to be a bright spot, increasing by 11.3 percent from November while multifamily starts decreased by 19 percent to a pace of 473,000.
The amount of new housing units authorized by building permits fell 1.6 percent to a seasonally adjusted annual rate of 1,330,000, which was 29.9 percent below the December 2021 rate of 1,896,000. Throughout all of 2022, an estimated 1,649,400 housing units were authorized by building permits, 5 percent below their 2021 levels.
Housing completions in December were at an annual rate of 1,411,000 8.4 percent below the November estimate of 1,540,000, but 6.4 percent above their December 2021 levels. 2022 saw an estimated 1,392,300 housing units completed, 3.8 percent above the 2021 figure of 1,341,000 according to the Census Bureau.
Despite the promising increase in single-family home production, some experts expected the slowdown in production to last through 2023.
“Even though single-family starts are up on a monthly basis, permits indicate that the housing market will slow down further in 2023,” Jerry Konter, chairman of the National Association of Home Builders said in a statement. “We expect a sustainable decline for mortgage rates in the second half of this year, which should lead to a housing recovery in 2024.”
NAHB officials pointed to the decline in permitting as evidence that a further drop in housing starts is on the horizon, as builders respond to declining housing demand due to high mortgage interest rates.
“The decline in single-family permits indicates that builders are slowing construction activity as interest rates have spiked in recent months,” Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis said in a statement.“Starts began on a strong footing in early 2022 but fell back in the latter part of the year as higher costs led to a pause in home building activity and affordability conditions worsened for home buyers.”