February 21, 2023

New Home Inventory Remains Tight

The United States Census Bureau released its Residential Construction Report and it showed that in January, Housing Starts, which are homes that are starting to be built, were down 4.5% to a 1.3 million unit annualized pace. This puts housing starts down 21% year over year. Most importantly, single-family starts were down 4.3% last month at an 840,000 unit pace which puts single-family starts down 27% year over year.

Housing Permits, which really is the future supply of new homes, were up 0.1% in January at a 1.34 million unit pace and are down 27% year over year. Single-family permits were down 1.8% last month to 720,000 units and have declined 40% year over year. Furthermore, Housing Completions were up 0.1% last month to 1.4 million units. On the single-family side, completions rose by 4.4% to 1.04 million units. This brings both completions up 12-13% from last year.

So, what does all of this mean? Well, with household formations (or people looking to purchase homes) being forecasted for 2023 at 1.9 million and builders completing 1.4 million homes, it doesn’t look like there will be many vacancies. Additionally, since Permits are your future supply and Permits are at 1.34 million units, when we compare that to the 1.9 million formations, supply looks like it will remain tight below demand and support home pricing.

Source : http://bit.ly/3Eevah6

By: Jon Iacono
A Family

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