Housing Starts, Building Permits, Builder Confidence on Rise

The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly reported an increase in both November 2021 residential housing starts and building permits. U.S. homebuilding surged to an eight-month high in November amid a severe shortage of properties on the market, though builders are also struggling to find solutions to higher prices for raw materials and labor shortages.

Housing starts increased 11.8% to a seasonally adjusted annual rate of 1.679 million units in November, the highest level since March, the Commerce Department reported. Permits for future homebuilding increased 3.6% to a rate of 1.712 million units in November 2021.

Despite inflation concerns and ongoing production bottlenecks, home builder confidence edged higher for the fourth consecutive month on strong consumer demand and limited existing inventory. Builder sentiment in the market for newly built single-family homes moved one point higher to 84 in December, according to the NAHB/Wells Fargo Housing Market Index (HMI). This ties the highest reading of the year posted in February 2021.

NAHB Chairman Chuck Fowke, noted, “While demand remains strong, finding workers, predicting pricing and dealing with material delays remains a challenge.”

Building permits for privately?owned housing units authorized in November 2021 were at a seasonally adjusted annual rate of 1,712,000. This is 3.6 percent above the revised October rate of 1,653,000 and is 0.9 percent above the November 2020 rate of 1,696,000. Single?family authorizations in November were at a rate of 1,103,000, a 2.7 percent increase above the revised October figure of 1,074,000. Authorizations of units in buildings with five units or more stood at a rate of 560,000 in November.

Privately?owned housing starts in November were at a seasonally adjusted annual rate of 1,679,000. The revised October estimate was 1,502,000 and November 2021 starts were 8.3 percent above the November 2020 rate of 1,551,000. Single?family housing starts in November stood at a rate of 1,173,000, representing a 11.3 percent increase above the revised October figure of 1,054,000. The November rate for units in buildings with five units or more was 491,000.

Privately?owned housing completions in November stood at a seasonally adjusted annual rate of 1,282,000. This represents a 4.1 percent increase above the revised October estimate of 1,231,000 and is 3.1 percent above the November 2020 rate of 1,244,000. Single?family housing completions in November were at a rate of 910,000, which is 0.1 percent below the revised October rate of 911,000. The November rate for units in buildings with five units or more was 364,000.

NAHB Chief Economist Robert Dietz, concluded, “The most pressing issue for the housing sector remains lack of inventory. Building has increased but the industry faces constraints, namely cost/availability of materials, labor, and lots. And while 2021 single-family starts are expected to end the year 24% higher than the pre-Covid 2019 level, we expect higher interest rates in 2022 will put a damper on housing affordability.”