June Housing Starts: All-Time Record Housing Units Under Construction

Housing Starts Decreased to 1.559 million Annual Rate in June

From the Census Bureau: Permits, Starts and Completions

Housing Starts:

Privately‐owned housing starts in June were at a seasonally adjusted annual rate of 1,559,000. This is 2.0 percent below the revised May estimate of 1,591,000 and is 6.3 percent below the June 2021 rate of 1,664,000. Single‐family housing starts in June were at a rate of 982,000; this is 8.1 percent below the revised May figure of 1,068,000. The June rate for units in buildings with five units or more was 568,000. 

Building Permits:

Privately‐owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 1,685,000. This is 0.6 percent below the revised May rate of 1,695,000, but is 1.4 percent above the June 2021 rate of 1,661,000. Single‐family authorizations in June were at a rate of 967,000; this is 8.0 percent below the revised May figure of 1,051,000. Authorizations of units in buildings with five units or more were at a rate of 666,000 in June.
emphasis added

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

Multi-family starts (blue, 2+ units) increased in June compared to May. Multi-family starts were up 15.6% year-over-year in June. Single-family starts (red) decreased in June and were down 15.7% year-over-year.

Note that the recent weakness is in single family starts (red).

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. Total housing starts in June were slightly above expectations, and starts in April and May, were revised up, combined.

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

 Total starts were down 6.3% in June compared to June 2021.  Total starts, year-to-date, are up 5.9% compared to the same period in 2021.

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 824 thousand single family units under construction (SA). This is just below the previous two months, and otherwise is the highest level since November 2006. Single family units under construction might have peaked since single family starts are now declining. The reason there are so many homes under construction is probably due to supply constraints.

Blue is for 2+ units. Currently there are 856 thousand multi-family units under construction.  This is the highest level since March 1974! For multi-family, construction delays are probably also a factor. The completion of these units should help with rent pressure.

Combined, there are a record 1.680 million units under construction. This is above the previous record of 1.628 million units that were under construction in 1973 (mostly apartments in 1973 for the baby boom generation).

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. Builders are still starting significantly more multifamily units than they are completing. 

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 might be decreasing since builders are now starting fewer single-family units.

Conclusion

Total housing starts in June were slightly above expectations, and starts in April and May, were revised up, combined. The recent weakness has been for single family starts.

There are a record number of housing units under construction due to construction delays (now above the previous record in 1973 when a huge number of apartments were being built for the baby boom generation).

Homebuilders are reporting that demand is slowing, yet a large number of housing units will be delivered later this year (with all these units under construction). Yesterday, the National Association of Home Builders (NAHB) reported that builder confidence “plunged” in June, and we should expect starts to decline sharply in coming months.