January Housing Starts: Most Housing Units Under Construction Since 1973

Housing Starts Decreased to 1.638 million Annual Rate in January

From the Census Bureau: Permits, Starts and Completions

Housing Starts:

Privately‐owned housing starts in January were at a seasonally adjusted annual rate of 1,638,000. This is 4.1 percent below the revised December estimate of 1,708,000, but is 0.8 percent above the January 2021 rate of 1,625,000. Single‐family housing starts in January were at a rate of 1,116,000; this is 5.6 percent below the revised December figure of 1,182,000. The January rate for units in buildings with five units or more was 510,000.

Building Permits:

Privately‐owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 1,899,000. This is 0.7 percent above the revised December rate of 1,885,000 and is 0.8 percent above the January 2021 rate of 1,883,000. Single‐family authorizations in January were at a rate of 1,205,000; this is 6.8 percent above the revised December figure of 1,128,000. Authorizations of units in buildings with five units or more were at a rate of 629,000 in January.
emphasis added

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

Multi-family starts (blue, 2+ units) decreased in January compared to December. Multi-family starts were up 8.3% year-over-year in January. Single-family starts (red) decreased in January and were down 2.4% year-over-year.

The second graph shows single and multi-family starts since 1968.

The second graph shows the huge collapse following the housing bubble, and then the eventual recovery (but still not historically high).

Total housing starts in January were below expectations, however, starts in November and December were revised up, combined.

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The third graph shows the month-to-month comparison for total starts between 2021 (blue) and 2022 (red). 

Total starts were up 0.8% in January compared to January 2021. 

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

Red is single family units. Currently there are 785 thousand single family units under construction (SA). This is the highest level since December 2006.

For single family, many of these homes are already sold (Census counts sales when contract is signed). The reason there are so many homes is probably due to construction delays. Since many of these are already sold, it is unlikely this is “overbuilding”, or that this will impact prices (although the buyers will be moving out of their current home or apartment once these homes are completed).  

Blue is for 2+ units. Currently there are 758 thousand multi-family units under construction.  This is the highest level since July 1974! For multi-family, construction delays are probably also a factor. The completion of these units should help with rent pressure.

Census will release data in March (part of February survey) on the length of time from start to completion, and that will probably show long delays in 2021. In 2020, it took an average of 6.8 months from start to completion for single family homes, and 15.4 months for buildings with 2 or more units.

Combined, there are 1.543 million units under construction. This is the most since September 1973.

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 that is new supply added to the market and starts are important because that is future new supply (units under construction is 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. Starts have picked up, but completions (red) have turned down - due to the construction delays. 

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 is due to the construction delays.

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