March Housing Starts: Most Housing Units Under Construction Since 1973

Housing Starts Increased to 1.793 million Annual Rate in March

From the Census Bureau: Permits, Starts and Completions

Housing Starts:

Privately‐owned housing starts in March were at a seasonally adjusted annual rate of 1,793,000.  This is 0.3 percent above the revised February estimate of 1,788,000 and is 3.9 percent above the March 2021 rate of 1,725,000.  Single‐family housing starts in March were at a rate of 1,200,000; this is 1.7 percent below the revised February figure of 1,221,000. The March rate for units in buildings with five units or more was 574,000.  

Building Permits:

Privately‐owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,873,000.  This is 0.4 percent above the revised February rate of 1,865,000 and is 6.7 percent above the March 2021 rate of 1,755,000.  Single‐family authorizations in March were at a rate of 1,147,000; this is 4.8 percent below the revised February figure of 1,205,000.  Authorizations of units in buildings with five units or more were at a rate of 672,000 in March.
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 March compared to February. Multi-family starts were up 26.2% year-over-year in March. Single-family starts (red) decreased in March and were down 4.4% 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 March were above expectations, and starts in January and February 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 up 3.9% in March compared to March 2021. 

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

Red is single family units. Currently there are 811 thousand single family units under construction (SA). This is the highest level since November 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 811 thousand multi-family units under construction.  This is the highest level since May 1974! For multi-family, construction delays are probably also a factor. The completion of these units should help with rent pressure.

Combined, there are 1.622 million units under construction. This is the most since February 1973, when a record 1.628 million units were under construction (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. 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.

Conclusion

Housing starts in March were above consensus expectations and starts for the previous months were revised up. A strong report.

There are a large number of housing units under construction due to construction delays, and we will probably see a record number of housing units under construction next month (eclipsing the previous record in 1973 when a huge number of apartments were being built for the baby boom generation).