Housing starts and permits fall as the correction continues
REAL ECONOMY BLOG | December 20, 2022
Authored by RSM US LLP
Housing starts dropped for the third month in a row in November as the housing market continued to be in correction mode, the Commerce Department reported on Tuesday.
There were 1.4 million residential starts on an annualized basis, falling short of the 1.7 million that we estimate are needed to meet long-term demand. That was a decline of 0.5% from a month ago, and a 16.4% decline from a year ago.
The correction in the housing market has been driven by the steep rise in mortgage rates from 3% last year to 7% last month. Even though mortgage rates have recently dropped to 6%, they remain elevated compared to the 10 years leading up to the pandemic.
We expect the correction to continue for a bit longer. The housing market often bottoms out when the economy starts to climb out of a recession, which in our estimation will take place in the second half of next year.
The decline in starts came entirely from single-family homes, which fell by 4.1% on the month; multifamily homes posted a sizable 4.9% increase.
Building permits, a proxy for future housing starts, were aligned with our expectation, plunging by 11.2%. The decline came from both single-family and multifamily homes, suggesting further declines ahead.
Inside the report, completions increased by 10.8% on the month, continuing to pick up as builders shift their focus from starting new projects to finishing existing ones, a common sign of a market contraction.
Call us at +1 213.873.1700, email us at email@example.com or fill out the form below and we'll contact you to discuss your specific situation.
This article was written by Tuan Nguyen and originally appeared on 2022-12-20.
2022 RSM US LLP. All rights reserved.
RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
Vasquez & Company LLP is a proud member of the RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.
Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.
For more information on how Vasquez & Company LLP can assist you, please call +1 213.873.1700.
Subscribe to receive important updates from our Insights and Resources.