Construction of new residences increased 1.4% in December, from approximately 1.67 million units at the annual rate in November to 1.70 million units, the best reading since March 2021, according to the U.S. Census Bureau.
Challenges: Rising construction costs and other affordability issues, as well as labor shortages, hampered housing construction in 2021.
Single family vs. multifamily: Building of single-family homes declined 2.3% in December, down to approximately 1.17 million units from approximately 1.19 million units in November. By contrast, multifamily-unit construction starts jumped 10.6%, from 479,000 units to 530,000 units, the best reading since February 2020.
The NAM says: “Overall, housing starts have trended lower since peaking at [approximately 1.72 million] in March, which was the best reading since July 2006,” said NAM Chief Economist Chad Moutray. “The gains over the past two months are hopefully the beginning of an upward trend. On a year-over-year basis, new residential construction has risen by a modest 2.5%, driven largely by the volatile multifamily segment. Single-family housing starts have dropped 10.9% over the past 12 months, speaking to the hurdles described above.”
Optimism maintained: Overall, builders feel optimistic about future growth, and solid sales are expected to continue in the first half of 2022.
- A 9.1% jump in housing permits—from an annualized rate of 1.71 million units in November to about 1.87 million units in December—is an 11-month high and suggests that housing construction should increase in the coming months, Moutray said.