November Housing Starts: Most Housing Units Under Construction Since 1973

Housing Starts Increased to 1.679 million Annual Rate in November

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately‐owned housing starts in November were at a seasonally adjusted annual rate of 1,679,000. This is 11.8 percent above the revised October estimate of 1,502,000 and is 8.3 percent above the November 2020 rate of 1,551,000. Single‐family housing starts in November were at a rate of 1,173,000; this is 11.3 percent above the revised October figure of 1,054,000. The November rate for units in buildings with five units or more was 491,000.

Building Permits:
Privately‐owned housing units authorized by building permits in November were at a seasonally adjusted annual rate of 1,712,000. This is 3.6 percent above the revised October rate of 1,653,000 and is 0.9 percent above the November 2020 rate of 1,696,000. Single‐family authorizations in November were at a rate of 1,103,000; this is 2.7 percent above the revised October figure of 1,074,000. Authorizations of units in buildings with five units or more were at a rate of 560,000 in November.
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 November compared to October.   Multi-family starts were up 37% year-over-year in November. Single-family starts (red) increased in November, and were down 0.7% 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 November were above expectations, and starts in September and October were revised up slightly, combined.

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The third graph shows the month-to-month comparison for total starts between 2020 (blue) and 2021 (red). 

Total starts were up 8.3% in November compared to November 2020.  In 2020, starts were off to a strong start before the pandemic, and with low interest rates, and little competing existing home inventory, starts finished 2020 strong.  

Year-to-date, starts are up 16.3% compared to the same period in 2020, and will finish the year around 1.6 million total starts. Starts in 2021 will be the most since 2006 when 1.801 million units were started.

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

Red is single family units. Currently there are 752 thousand single family units under construction (SA). This is the highest level since March 2007.

For single family, most 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 most of these are already sold, it is unlikely this is “overbuilding”, or that this will impact prices.   

Blue is for 2+ units. Currently there are 734 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 next year 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 1.486 million units under construction. This is the most since 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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