WASHINGTON — Overall housing starts fell 4.3% in December to a seasonally adjusted annual rate of 1.46 million units following an unusually strong reading the month before, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.   

The December reading of 1.46 million starts is the number of housing unit-builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 8.6% to a 1.03 million seasonally adjusted annual rate but are up 15.8% compared to a year ago. The multifamily sector, which includes apartment buildings and condos, increased 8% to a 433,000 pace.

Total housing starts for 2023 were 1.41 million, a 9% decline from the 1.55 million total from 2022. Single-family starts in 2023 totaled 945,000, down 6% from the previous year. Multifamily starts in 2023 totaled 469,000, down 14.4% compared to the previous year. 

“Mortgage rates steadily fell below 7% in December, and lower rates combined with a lack of existing inventory in most markets helped to keep single-family production above a one million-unit annual pace,” Alicia Huey, chairman of the National Association of Home Builders (NAHB) said in a press release, “and the fact that our latest surveys showed a big increase in builder confidence is an indicator that we can expect housing starts to improve in the coming months. Overall, 2023 was a challenging year for new home construction as housing took a hit due to higher rates and tight monetary policy.”  

“Moderating mortgage rates are expected to provide a boost to new home construction in 2024, but an uptick in building material prices and a shortage of buildable lots and skilled labor are serious challenges for home builders,” Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis said in the release, “a rise in single-family permits is a sign that we will see the single-family market pick up steam in the near future. However, due to tighter financing, the multifamily market will weaken.”  

On a regional and year-to-year basis, combined single-family and multifamily starts are 20.1% lower in the Northeast, 10.7% lower in the Midwest, 5.5% lower in the South and 11.6% lower in the West.

Overall permits increased 1.9% to a 1.50 million unit annualized rate in December and are up 6.1% compared to December 2022. Single-family permits increased 1.7% to a 994,000 unit rate and up 32.9% compared to the previous year. Multifamily permits increased 2.2% to a 501,000 pace.

Looking at regional permit data on a year-to-year basis, permits are 21.3% lower in the Northeast, 14.1% lower in the Midwest, 9.4% lower in the South and 12.2% lower in the West.