November 2022 Residential Construction – U.S. Census Bureau

Each month the United States Census Bureau releases a report on new residential construction in which they track units permitted, units authorized but not started, units started, units under construction, and units completed. Units permitted is a leading indicator for the US economy and provides insight for an economic forecast.

For November 2022 total new residential permits issued decreased -11.2% from October 2022 and -22.4% from November 2021. Given rising interest rates the number of purchasers in the market has decreased, decreasing the need for new units. While both single-family permits and multi-family permits have seen month/month and year/year declines, single family permits have decreased -7.1% from last month and -29.4% from last year. Multi-family permits have seen larger month/month declines, -17.9%; however, year over year multi-family units permits have decreased less than single family at -10.7%

Units authorized but not started represent delays in the pre-construction phase. From October 2022 we see a decrease in total units authorized but not started by -2.0%. This means that for every 100 units authorized but not started in October there were 98 in November. However, units authorized but not started are still higher than this time last year, +10.2%. 

As higher interest rates push less competitive single family projects to the sidelines we expect to see units authorized but not started continue to decrease. We see that from October 2022 single family units authorized but not started have decreased -3.4% and -4.0% from November 2021. However, more competitive multi-family projects have seen large rises in authorized but not started, no change from October 2022 but up 28.9%. These projects are still in the works, but most likely sitting on the shelf until interest rates come down. 

Units started for November 2022 decreased -0.5% from October 2022 and -16.4% from November 2021. However, these decreases were only in the single family market down -4.1% m/m and -32.1% y/y. Multi-family units saw starts rise +4.8% from last month and +24.5% from last year. 

Units under construction at the end of the period may represent delays in the construction phase of the project. No change from last month but an increase of 14.5% from last month. Rising interest rates and mismanaged supply chains have caused delays across industries and impacted the ability of construction companies to acquire the materials they need without long lead times. Single family units have seen -1.3% decrease in units under construction from last month but a +2.9% increase from November 2021. Multi-family units on the other hand have seen a +1.1% increase from last month and a +26.2% increase from November 2021. 

Nearly 1.5 million units were completed in November 2022, up +10.8% from October 2022 and up +6% from last year. Single family units were up +9.5% from last month and +9.9% on the year. Multi-family units saw a 15.9% increase from last month but down -3.2% from November 2021. Many of these projects were started early this year or last year when interest rates were lower, attributing to the large number of houses coming onto the market now.