US Housing Starts Plunge -16.4% Since Last November As Fed Tightens (Permits Plunge -22.4% YoY)

Confounded Interest ^ | 12/20/2022 | Anthony B. Sanders

[Kaiser8408a]

US housing starts plunged -16.4% since the same time last year (aka, YoY) as The Federal Reserve continues tightening its monetary policy.

Since October (aka, MoM), housing starts only dropped -.049% in November. 1-unit detached starts were down -4.06%. But multifamily (5+) starts were up 4.85% MoM.

Building permits were down -11.24% from October to November (baby, its cold outside!) and down -22.4% since November 2021 (aka, YoY).

Now, watch as President Biden and The Fed make housing construction disappear.

[Kaiser8408a]

Rate increases crushing US housing market as The Fed fights idiotic Biden policies.

[central_va]

The fed is killing the economy because G-ma hates inflation and has to eat dog food.

[C210N]

stock market should like this.... this is fodder for the fed to pivot, and even out the interest rates, as opposed to increasing them more.

[woodbutcher1963]

They will be down even more next month. Yes, I know they are seasonally adjusted. I have multiple customers in places like OKC, Coeur d’Alene, Boise that are all telling me business(lumber) has come to a screeching halt in the last month. That prior to Thanksgiving they could not get enough concrete to nobody doing anything.

The weather also has not helped. The last three winters were generally very mild. Plus there was huge demand. Framers, truss plants hardly even slowed down around the Christmas holidays. Now, every sawmill in North American is taking downtime because of the drop in lumber prices over the last few months. I personally bought lumber(truckloads)yesterday at the cheapest level I have paid in over five years.

We are also being inundated with European lumber. It is coming into every port in the eastern US. So, much so that it is driving down the price of Canadian and US lumber to levels below their cost. So mills that were making huge margins just 10-12 months ago are now whining that they are losing money at these prices.

[Gay State Conservative]

There are three “knockdowns” in my (middle class) suburban neighborhood...all having belonged to old folks who died. One lot was just replaced with a duplex,both of which have an asking price of $950K. Another lots is having a foundation poured right now...presumably it will be another duplex. The third one is still empty...no activity.

[SaxxonWoods]

This will slow supply which will support housing values.

[woodbutcher1963]

The percentage of “multi family” starts and permits will increase next year in relation to single family.
There is still a need in most areas for apartments, work force housing and rental housing in general.

So, anywhere you can tear down an old single family house and put up multifamily you will continue to see.

The rise in interest rates also takes out a lot of the smaller real east investors. The large real estate investors will continue to look at RENTAL INCOME as almost a a guarantee with almost no downside potential. Especially in comparison the stock market.

[SaxxonWoods]

I agree with your take, and around here Tiny Homes are hot where builders can get them approved. Friend is building out 19 now, building not going fast due to labor.

900SF, $350k-ish price, 10 sold and closed, the other 9 are under contract and awaiting construction.

Same builder has people waiting in line for up to 2 years to build on acreage out of town they already own. $800-$2mm, 2 year waiting list and these folks are paying cash, don’t care about mortgage rates.

[rktman]

New homes are going up like crazy in our area. Guess we’ll see if buyers show up. And, in our area they are not inexpensive. Cheap, probably. Nearly none of the new ones are under $500k. 😲

[SaxxonWoods]

“Guess we’ll see if buyers show up”

I doubt those are spec homes, they are probably being built due to orders in place.

[woodbutcher1963]

Where is HERE?

“building not going fast due to labor.”

This is why more and more houses/apartments/hotels/etc in the future are going to be built in modular factories/wall panel plants.

There is a company in Idaho that builds all the Marriott hotels in a factory. Each room is a module. The hotel is assembled on site exactly the same whether it is in Des Monies or LA.

My customer in Boise is building a wall panel plant. They are a single family and multi family home building company.
The walls and the trusses both floor and roof get shipped to the job site as a component.

This is the trend going forward. Standardization of home building. The customized stick built on site house will only be for very expensive custom houses.

The other benefit of building in a factory is the quality is better.

[rktman]

Reno. Although, I did notice one builder dropping prices by about $50 grand recently. Been a crazy year for property in Reno.

[woodbutcher1963]

One of the homes builders I spoke about in Boise has already dropped the prices of their single family homes between 20-25% from the beginning of the year.
Keep in mind these houses doubled in price in about a 2 1/2 year period. All based on the huge influx of people from California and Seattle.

[rktman]

Yup. Same in Reno. And not a lot of the conservative persuasion have come here. 😯

[SaxxonWoods]

I’m in western Colorado. I like modular/factory-builts, specifically Heritage Homes of Nebraska. I used them to build a 4-plex in 2000, sold it right as Covid hit. I’m out of the active rental biz now, was in it for 40 years. I bought a Magnolia modular due to a spectacular location, rented it for 5 years until I retired, then lived in it for about 13 years, sold it when I moved to a warmer and more tranquil area as the tourist industry and crowding was affecting the quality of life and we felt the winters more as we aged.