Residential construction numbers exceeded expectations again in December. Most of the gains, however, came from the multifamily sector.
The U.S. Census Bureau and the Department of Housing and Urban Development reported that permits for residential construction were up 9.1 percent from November to a seasonally adjusted rate of 1.873 million units, the highest of the year and 6.5 percent above the rate a year earlier. The November permitting rate was revised from 1.712 million to 1.717 million.
Single-family permits rose 2.0 percent to 1.128 million units from 1.106 million in November, a slight upper revision from the 1.103 million units first reported for the month. Single-family authorizations were 8.5 percent lower than in December 2020.
Multifamily permits rose 19.9 percent to 675,000 units, a 41.8 percent year-over-year improvement. There was also an unusual increase in permitting for two-to-four-unit dwellings. The 70,000-unit annual permitting rate represented a 45.8 percent increase from November and 42.9 percent on an annual basis.
On an unadjusted basis, permits were issued for 152,000 residential units during the month, 81,300 of them single-family units. In November, the respective numbers were 131,800 and 80,400.
For the entirety of 2021 there were 1.725 million construction permits issued compared to 1.471 the prior year, a gain of 17.2 percent. Single-family permits grew 13.4 percent to 1.111 million and the 562,100 multifamily permits represented an annual increase of 26.4 percent.
Housing starts added 1.4 percent to the 11.8 percent gain it posted in November to bring its annual rate to the highest of the year as well. Residential units were started at a seasonally adjusted rate of 1.702 million units during the month compared to 1.678 million (a small downward revision from 1.679 million) in November. Starts finished the year up 2.5 percent year-over-year.
In the case of starts, all of the gains were in multifamily construction which increased by 13.7 percent to 524,000 annual units. This is up 56 percent from the prior December. Single-family starts were down 2.3 percent from November’s rate of 1.199 million units to 1.172 million, and 10.9 percent lower on an annual basis.
Analysts polled by both Econoday and Trading Economics had expected permits to come in at a seasonally adjusted rate of 1.710 million units and forecast housing starts at 1.650 million units.
On an unadjusted basis, construction starts totaled 120,300 units during the month, down from 128,900 in November. There were 81.0 single-family starts compared to 89,500 a month earlier.
During the year, builders initiated construction on 1.595 million residential units, a 15.6 percent increase over the total in 2020. Single-family starts increased 13.4 percent to 1.123 million and the 460,100 multifamily units represented a 22.2 percent annual gain.
Completions were down 8.7 percent from November to a rate of 1.295 million annual units, 6.6 percent below the rate in December 2020. Single-family completions rose 3.9 percent to an annual rate of 990,000 units, a 3.3 percent above the December 2020 rate. It was multifamily construction that dragged down the numbers in the case of completions. Those fell 34.3 percent for the month and 28.0 percent year-over-year to 299,000 units.
Completions in December were at a 123,000-unit rate with 95,900 of them single-family dwellings. The comparable numbers in November were 112,700 and 78,700.
There were 1.338 million housing units completed last year, a 4.0 percent improvement over 2020. Single-family completions grew 6.1 percent to 966,900 units while the 363,200 multifamily units that were finished represented an 0.4 percent decrease.
At the end of December there were 1.519 million homes under construction, 769,000 of them single-family houses. Unused permits totaled 270,00 thousand including 144,000 for single-family houses.
Permits in the Northeast soared 111.9 percent in December and were up 95.5 percent from December 2020. Starts rose 20.2 percent although they gained only 0.7 percent from a year earlier. Completions were up 4.4 percent for the month but down 4.8 percent on an annual basis.
The Midwest saw an increase of 21.9 percent in permitting compared to the previous month and 3.1 percent year-over-year. Starts jumped 36.5 and 17.1 percent from the two earlier periods while completions fell by 23.4 percent and 12.1 percent.
Permitting dipped 0.8 percent in the South compared to November and was 0.1 percent higher than the prior December. Starts lagged the prior month by 1.9 percent but gained 9.3 percent from a year earlier. Completions fell compared to both earlier periods, down 3.1 and 1.5 percent.
A decline of 10.0 percent in the West’s permitting left it 9.4 percent lower than a year earlier and starts fell by 13.8 percent and 18.1 percent for the month and year. Completions also declined for both periods, by 15.7 and 15.0 percent.