March Housing

Housing Starts:
Privately‐owned housing starts in March were at a seasonally adjusted annual rate of 1,420,000. This is 0.8 percent below the revised February estimate of 1,432,000 and is 17.2 percent below the March 2022 rate of 1,716,000. Single‐family housing starts in March were at a rate of 861,000; this is 2.7 percent above the revised February figure of 838,000. The March rate for units in buildings with five units or more was 542,000.

Building Permits:
Privately‐owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,413,000. This is 8.8 percent below the revised February rate of 1,550,000 and is 24.8 percent below the March 2022 rate of 1,879,000. Single‐family authorizations in March were at a rate of 818,000; this is 4.1 percent above the revised February figure of 786,000. Authorizations of units in buildings with five units or more were at a rate of 543,000 in March.
emphasis added

The first graph shows single and multi-family housing starts since 2000 (including the housing bubble).

Multi-family starts (blue, 2+ units) decreased in March compared to February.   Multi-family starts were up 6.5% year-over-year in March.  Single-family starts (red) increased in March and were down 27.7% year-over-year.

Note that the weakness over the last year has been in single-family starts (red), and multi-family starts are up year-over-year.

The second graph shows single and multi-family starts since 1968. This shows the huge collapse following the housing bubble, and then the eventual recovery - and the recent collapse in single-family starts.

Total housing starts in March were slightly above expectations, however, starts in January and February were revised down slightly, combined.

The third graph shows the month-to-month comparison for total starts between 2022 (blue) and 2023 (red).

Total starts were down 17.2% in March compared to March 2022.  Starts have been down year-over-year for eleven consecutive months, and I expect starts to be down significantly this year - although the year-over-year comparisons will be easier later in the year.

Near Record Number of Housing Units Under Construction

The fourth graph shows housing starts under construction, Seasonally Adjusted (SA).

Red is single-family units. Currently, there are 716 thousand of single-family units (red) under construction (SA). This was down in March compared to February, and 112 thousand below the recent peak in April and May 2022. Single-family units under construction have peaked since single-family starts are now declining. The reason there are still so many homes under construction is probably due to supply constraints.

Blue is for 2+ units. Currently, there are 958 thousand multi-family units under construction.  This is the highest level since November 1973! For multi-family, construction delays are probably also a factor. The completion of these units should help with rent pressure.

Combined, there are 1.674 million units under construction, just 37 thousand below the all-time record of 1.711 million set in October 2022.

Comparing Starts and Completions

Below is a graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because new supply is added to the market and starts are important because that is future new supply (units under construction are also important for employment).

These graphs use a 12-month rolling total for NSA starts and completions.

The blue line is for multifamily starts and the red line is for multifamily completions. Builders are still starting more multifamily units than they are completing.  Multifamily starts (blue) have slowed, and completions (red) are picking up - although the gap is still huge.

The last graph shows single-family starts and completions. It usually only takes about 6 months between starting a single-family home and completion - so the lines are much closer than for multi-family. The blue line is for single-family starts and the red line is for single-family completions.

The recent gap between starts and completions has disappeared, and builders are now completing more single-family homes than they are starting. Completions will follow starts down soon.