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New housing starts in the U.S. dropped 9.0% in 2023 compared to the previous year, with the industry initiating an estimated 1.413 million new housing units. This decline, despite a monthly gain in November, indicates potential challenges for homebuyers in 2024 due to a continued lack of inventory. Overall, the estimated number of building permits issued in 2023 also saw an annual decrease of 11.7%, totaling 1.469 million units, further contributing to supply constraints.
How Did New Housing Starts Perform in 2023, and What's the Outlook for 2024?
Mortgage rates dropped. However, new housing starts dropped 9%. 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.
New Housing Starts Dropped 9.0% In 2023
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.
