April 2023 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in April at a seasonally adjusted annual rate (SAAR) of 1,401,000 units (1.405 million expected). This is 2.2% (±11.9%)* above the revised March estimate of 1,371,000 (originally 1.420 million units), but 22.3% (±8.7%) below the April 2022 SAAR of 1,803,000 units; the not-seasonally adjusted YoY change (shown in the table above) was -22.6%.

Single-family housing starts in April were at a SAAR of 846,000; this is 1.6% (±12.3%)* above the revised March figure of 833,000 units (-28.2% YoY). Multi-family: 555,000 units (+3.2% MoM; -11.5% YoY).

* 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 1,375,000. This is 10.4% (±9.9%) below the revised March estimate of 1,534,000 (originally 1.542 million units), but 1.0% (±16.4%)* above the April 2022 SAAR of 1,361,000 units; the NSA comparison: +0.1% YoY.

Single-family completions were at a SAAR of 971,000; this is 6.5% (±11.0%)* below the revised March rate of 1,039,000 units (-5.9% YoY). Multi-family: 404,000 units (-18.4% MoM; +18.7% YoY).

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Total permits were at a SAAR of 1,416,000 units (1.430 million expected). This is 1.5% below the revised March rate of 1,437,000 (originally 1.413 million units) and 21.1% below the April 2022 SAAR of 1,795,000 units; the NSA comparison: -26.5% YoY.

Single-family authorizations were at a SAAR of 855,000; this is 3.1% above the revised March figure of 829,000 units (-24.7% YoY). Multi-family: 561,000 units (-7.7% MoM; -29.4% YoY).

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Press release from NAHB’s Robert Dietz:

“Limited existing inventory, which has put a renewed emphasis on new construction, resulted in a solid gain for builder confidence in May even as the industry continues to face several challenges, including building material supply chain disruptions and tightening credit conditions for construction loans.

“Builder confidence in the market for newly built single-family homes in May rose five points to 50, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This marks the fifth straight month that builder confidence has increased and is the first time that sentiment levels have reached the midpoint mark of 50 since July 2022.

“New home construction is taking on an increased role in the marketplace because many homeowners with loans well below current mortgage rates are electing to stay put, and this is keeping the supply of existing homes at a very low level. In March, 33% of homes listed for sale were new homes in various stages of construction. That share from 2000-2019 was a 12.7% average. With limited available housing inventory, new construction will continue to be a significant part of prospective buyers’ search in the quarters ahead.

“While this is fueling cautious optimism among builders, they continue to face ongoing challenges to meet a growing demand for new construction. These include shortages of transformers and other building materials and tightening credit conditions for residential real estate development and construction brought on by the actions of the Federal Reserve to raise interest rates.

“And with interest rates more than doubling from 2021, the HMI survey shows incentives have played a key role in attracting buyers in this new economic climate and that the use of these sales inducements are gradually slowing across the board:

• The share of builders reducing home prices dropped to 27% in May, down from 30% in April, 31% in Feb. and March, and 36% last November.
• The average price reduction remains at 6%, unchanged for the past four months.
• 54% offered some type of incentive to bolster sales in May, down from 59% in April and 62% last December.”

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.