New Residential Construction

 The data on new privately-owned housing units provides a mixed outlook for the U.S. housing market. Here are the key takeaways:

1. Decline in Housing Starts and Permits:

   • Total housing starts dropped 9.83% month-over-month and 0.73% year-over-year, indicating a slowdown in new home construction.
   • Single-family housing starts saw an 8.39% monthly decline and 1.78% annual drop, suggesting weaker demand or builder caution.
   • Multifamily housing starts (5+ units) declined 11.03% monthly, though they were up 2.31% year-over-year.
   • Building permits for total housing fell 0.61% monthly and 2.32% annually, showing a slowing pace of new projects entering the pipeline.
   • Single-family permits declined 0.20% monthly and 3.59% annually, reinforcing a cooling trend in single-family home construction.

2. Ongoing Decline in Units Under Construction:

   • Total units under construction fell 1.40% monthly and 15.63% annually, showing a consistent contraction in active projects.
   • Single-family homes under construction declined 0.47% monthly and 6.29% annually, aligning with the downturn in starts.
   • Multifamily units under construction experienced a sharp 2.09% monthly decline and a 22.50% annual decline, indicating a slowdown in larger apartment and condo developments.

3. Increase in Housing Completions:

   • Total completions rose 7.63% month-over-month and 9.77% year-over-year, meaning more homes are being finished and entering the market.
   • Single-family completions increased 7.09% monthly and 8.87% annually, likely boosting available inventory.
   • Multifamily (5+ units) completions saw a strong 10.14% monthly rise and 11.83% annual increase, signaling a shift in supply from construction to market availability.

4. Increase in Permits Not Yet Started:

   • Units authorized but not started increased 3.59% monthly and 6.41% annually, suggesting that while permits are being issued, builders may be delaying construction.

Implications:

• The data suggests a slowdown in new housing starts and construction, particularly in the single-family sector.
• However, the increase in housing completions means more inventory is becoming available, which could help ease supply constraints.
• The decline in units under construction, especially for multifamily homes, could lead to future shortages if demand remains steady.
• Housing permits have declined, indicating future construction may continue slowing unless market conditions improve.

Key Factors to Watch:

• Interest rates: High mortgage rates are likely discouraging new construction and demand.
• Housing affordability: If prices remain high despite increased completions, demand could weaken further.
• Labor and material costs: Builders may be delaying projects due to cost uncertainties.
• Rental market: The decline in multifamily construction could tighten the rental market in the coming months.