In February, single-family building permits jumped 1.0% to 1.031 million units, the highest level since May 2022. Multifamily development permits grew 2.4% to 429,000 units. Total building permits rose 1.9% to 1.518 million.
Due to a massive multi-family development backlog, single-family homebuilding is likely to dominate this year. Residential investment rebounded in the second half of 2023 after nine straight quarters of decline, the longest stretch since the 2006 housing market crash. Gross domestic product has suffered for two years.
"Housing construction is likely to add modestly to economic growth in the months ahead as builders await Fed rate cuts later this year," said FWDBONDS chief economist Christopher Rupkey. "Housing construction has likely turned the corner in this economic cycle and will cease to be a drag on the overall economy."
A minority of economists think the Fed won't lower rates this year, especially if inflation stays high. Wall Street stocks mainly fell. US dollar rose against basket of currencies. Treasury prices climbed.
In February, 270,000 permitted homes were unbuilt, up 0.4%. The single-family homebuilding backlog declined 1.4% to 141,000 units. That housing segment's completions rate rose 20.2% to 1.072 million units, the highest since November 2022.
Overall housing completions rose 19.7% to 1.729 million units, the most since January 2007. Good news for supply, which keeps property prices high and causes rental inflation. Realtors predict that 1.5 million to 1.6 million house starts and completions per month are needed to close the inventory gap.
Housing building fell 0.5% to 1.666 million units. The number of single-family homes under construction rose 0.3% to 683,000. Multifamily housing under construction fell 1.0% to 966,000 units.
In July 2023, multi-family housing building reached a record 1.001 million units. Additional apartment availability will limit rental price increases, a primary inflation driver. "More multi-family units should weigh on rental inflation, which is decelerating but still elevated," said Oxford Economics U.S. head economist Nancy Vanden Houten.
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