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Wednesday, January 19, 2022

December 2021 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in December at a seasonally adjusted annual rate (SAAR) of 1,702,000 units (1.650 million expected).  This is 1.4% (±10.1%)* above the revised November estimate of 1,678,000 (originally 1.679 million units) and 2.5% (±13.8%)* above the December 2020 SAAR of 1,661,000 units; the not-seasonally adjusted YoY change (shown in the table above) was +4.5%. 

Single-family housing starts were at a SAAR of 1,172,000; this is 2.3% (±9.8%)* below the revised November figure of 1,199,000 units (-9.7% YoY). Multi-family: 530,000 units (+10.6% MoM; +54.7% YoY).

An estimated 1,595,100 housing units were started in 2021. This is 15.6% (±4.0%) above the 2020 figure of 1,379,600.

* 90% confidence interval (CI) is not statistically different from zero. The Census Bureau does not publish CIs for the entire multi-unit category.

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Total completions were at a SAAR of 1,295,000 units.  This is 8.7% (±14.5%)* below the revised November estimate of 1,418,000 (originally 1.282 million units) and 6.6% (±10.4%)* below the December 2020 SAAR of 1,386,000 units; the NSA comparison: -5.7% YoY. 

Single-family completions were at a SAAR of 990,000; this is 3.9% (±13.3%)* above the revised November rate of 953,000 units (+4.2% YoY). Multi-family: 305,000 units (-34.4% MoM; -29.6% YoY).

An estimated 1,337,800 housing units were completed in 2021. This is 4.0% (±3.2%)* above the 2020 figure of 1,286,900.

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Total permits were at a SAAR of 1,873,000 units (1.710 million expected).   This is 9.1% (±1.1%) above the revised November rate of 1,717,000 (originally 1.712 million units) and 6.5% (±1.7%) above the December 2020 SAAR of 1,758,000 units; the NSA comparison: +10.9% YoY.  Much of the outsized increase in permits comes from a 111.9% (+/- 3.8%) jump in permits issued in Philadelphia, PA.  Philadelphia enacted several real estate tax changes for residential projects permitted after December 31, 2021.

Single-family authorizations were at a SAAR of 1,128,000; this is 2.0% (±1.3%) above the revised November figure of 1,106,000 units (-8.2% YoY). Multi-family: 745,000 units (+21.9% MoM; +46.1% YoY). 

An estimated 1,724,700 housing units were authorized by building permits in 2021. This is 17.2% (±0.6%) above the 2020 figure of 1,471,100; the NSA comparison was 1.710 million units (+16.2% YoY).

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Growing inflation concerns and ongoing supply chain disruptions snapped a four-month rise in home builder sentiment even as consumer demand remains robust. Builder confidence in the market for newly built single-family homes moved one point lower to 83 in January, according to the NAHB/Wells Fargo Housing Market Index (HMI). The HMI has hovered at the 83 or 84 level, the same rate as the spring of 2021, for the past three months.

“Higher material costs and lack of availability are adding weeks to typical single-family construction times,” said NAHB Chairman Chuck Fowke. “NAHB analysis indicates the aggregate cost of residential construction materials has increased almost 19% since December 2020. Policymakers need to take action to fix supply chains. Obtaining a new softwood lumber agreement with Canada and reducing tariffs is an excellent place to start.”

“The HMI data was collected during the first two weeks of January and do not fully reflect the recent jump in mortgage interest rates,” said NAHB Chief Economist Robert Dietz. “While lean existing home inventory and solid buyer demand are supporting the need for new construction, the combination of ongoing increases for building materials, worsening skilled labor shortages and higher mortgage rates point to declines for housing affordability in 2022.”

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

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