New Housing Starts Dropped 9.0% In 2023. Will Things Get Worse In 2024? Is The U.S. Heading Into A Recession?

Mortgage rates dropped. However, new housing starts ended the year on a downturn. This is even after posting a large monthly gain in November.

HUD reports show new construction starts fell to a seasonally adjusted annual rate of 1.46 million units. This is down 4.3% month over month.

The mixed results came in both the single family and multifamily sectors. While single family housing starts dropped 8.6% from November to a rate of 1.027 million units. However, multifamily starts were up 7.5% on a monthly basis to a rate of 417,000 units. However, this figure was down 9.5% compared to a year prior.

The housing industry started an estimated 1.413 million new housing units in 2023. The industry saw a drop of 9.0% compared to 2022.

Homebuyers may continue to struggle finding a home due to the lack of inventory in 2024. Overall, estimated number of building permits issued in 2023 was down 11.7% annually to 1.469 million units.

The number of building permits that were issued in December increased 1.9% for the month. This is despite an overall drop in 2023. Notably, the number of single-family authorizations was up 32.9% year over year in December to a rate of 994,000 units. Where as, multifamily authorizations were down 26.6% annually to 449,000 units.

However, housing completions did post a yearly increase for all of 2023. They are estimated to come in at 1.4525 million units, up 4.5% compared to 2022.

Housing completions were also up on a monthly basis. They rose 8.7% to 1.574 million units.

Regionally, housing starts were down month over month in the Midwest (8.8%). Housing starts in the South were down 5.1%. They were down 16.9% in the Northeast. However, they were up 4.7% in the West.

On a yearly basis, homebuilders’ housing starts were up in three out of the four regions.

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