Housing starts plunged in March, but for the past year, it’s really a tale of two markets, single-family vs multi-family. 
Housing starts fell 14.7 percent in March from February as noted by the Census Department New Residential Construction report.
But weakness since the beginning of 2023 has predominately been in multi-family construction.
Single-Family vs Multi-Family Since 2023
- Total Starts: -1.4%. 1,340 to 1,321
- Single-Family: +24.2%, 823 to 1,022
- Multi-Family: -42.2%, 517 to 299
Construction Report Details
Building Permits: Privately‐owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,458,000. This is 4.3 percent below the revised February rate of 1,523,000, but is 1.5 percent above the March 2023 rate of 1,437,000. Single‐family authorizations in March were at a rate of 973,000; this is 5.7 percent below the revised February figure of 1,032,000. Authorizations of units in buildings with five units or more were at a rate of 433,000 in March.
Housing Starts: Privately‐owned housing starts in March were at a seasonally adjusted annual rate of 1,321,000. This is 14.7 percent (±9.9 percent) below the revised February estimate of 1,549,000 and is 4.3 percent (±9.4 percent) below the March 2023 rate of 1,380,000. Single‐family housing starts in March were at a rate of 1,022,000; this is 12.4 percent (±12.5 percent) below the revised February figure of 1,167,000. The March rate for units in buildings with five units or more was 290,000.
Housing Completions: Privately‐owned housing completions in March were at a seasonally adjusted annual rate of 1,469,000. This is 13.5 percent (±11.0 percent) below the revised February estimate of 1,698,000 and is 3.9 percent (±13.5 percent) below the March 2023 rate of 1,528,000. Single‐family housing completions in March were at a rate of 947,000; this is 10.5 percent (±10.1 percent) below the revised February rate of 1,058,000. The March rate for units in buildings with five units or more was 502,000.
Note the huge margins of error in starts and completions. The data is heavily revised.
Housing Starts, Permits, Completions
Despite wild swings it appears as if nothing is happening. But the lead chart provides a better picture of the last year.
Multi-family construction has collapsed 42.2 percent since January 2023.
Looking back to April of 2022, multi-family construction plunged from 627,000 to 299,000. That’s a plunge of 52.3 percent.
It’s Been a Bloody Month for Bond Market Bulls
If you are a bond market bull, it’s been a tough month. US Treasury Yields from the New York Fed as of 2024-04-10
On April 12, I noted It’s Been a Bloody Month for Bond Market Bulls
Yields are higher still. I will do an update today, plus a look at mortgage rates.
Expect more housing weakness, even single-family.
Mortgage rates at 7.5% with no relief in sight. Not many will buy $450,000 new homes at that rate.
No surprise on multi-family given the insane amount of new multifamily inventory brought to market in Sunbelt states over the past 3 years or so. Apartment complex vacancy has gone up a lot thanks to the flood of new apartments in places like Florida, Georgia, Arizona, etc.
CA housing crashing…
———
California Condo Sells for About Half Its Value as Housing Market Rocked
By Giulia Carbonaro
April 15, 2024
https://www.newsweek.com/california-condo-sells-half-value-housing-market-rocked-1890201
AND
Nearly 20% of San Francisco Home Sellers Take a Loss on Their Sale, More Than Four Times the National Share
April 10, 2024
by Dana Anderson and Elijah de la Campa
• The share of San Francisco sellers losing money on their home sale is sitting near its highest level in more than a decade, largely because prices have come back down to earth after skyrocketing during the pandemic.
• Nationwide, the share of sellers losing money is much smaller (4%) because home prices remain near their record high.
• In San Francisco, the typical seller who’s parting ways with their home for less than they originally paid is losing $155,500. Nationwide, the median loss is roughly $40,000.
• New England sellers are least likely to lose money, with less than 2% of Providence, RI and Boston sellers taking a loss.
Nearly one of five (17.8%) homes that sold in San Francisco during the three months ending February 29 sold at a loss. That’s comparable with the 17.9% share hit during the three months ending January 31, which was the highest in 11 years.
That’s a higher share than any other metro, and it’s more than four times the national share of 4.3%. The national share of sellers taking a loss is the highest it has been since May 2021, but the share has been fairly stable over the past two years, hovering between 2% and 4.5%.
In San Francisco, the typical homeowner who sold at a loss parted with their home for $155,500 less than they bought it for, the largest dollar loss of any major metro. Nationwide, the median loss was $39,912.
This is according to a Redfin analysis of county records and MLS data across the 50 most populous U.S. metros. To be included in this analysis, a home must have been owned by the same party for at least nine months leading up to the sale. When we say “sold at a loss,”, we mean the seller sold the home for less than they bought it for.
…
https://www.redfin.com/news/san-francisco-home-sellers-lose-gain-money/
Jojo
Who then is going to build all those dwelling units, to house the millions of illegal aliens coming across the border?
Today, in a show of gratitude, they are protesting at NYC city hall, over plans to move them from luxury hotels, to shelters.
Millions will be deported.
Millions more will leave voluntarily if the benefits get cut off and it is made impossible to hire them. Asset forfeiture,bankruptcy and jail for anyone employing an illegal for anything would do it.
NYC is collapsing before our eyes.
Their alleged Senator Schumer is arguing in Congress that DHS Secretary Mayorkis is not incompetent and in violation of US law, and there in no border crisis, no massive invasion of illegal aliens.
Simultaneously, he is asking for federal bailout money for NYC to fund housing and welfare for the illegal aliens he says do not actually exist.
Meanwhile, NYC can’t figure out why no one wants to visit and pay 5 star hotel rates to be in a room next to illegal immigrants, who sure are noisy for people Schumer claims do not exist.
Stand by for a tax increase on NYC citizens who are still obeying NYC law
Who do you think wants to rent to someone who is here illegally and not able to legally work?
– Single-Family: +24.2%, 823 to 1,022
> Where the Money is, or can be realistically lent out to, with a reasonable assumption that they will pay it back.
– Multi-Family: -42.2%, 517 to 299
> Where the Money isn’t, and cannot be realistically lent out to, with a reasonable assumption that they will pay it back.
It is what it is right now…
Abilty to repay the loan is a more important question than single vs multi family. Investors want a return, they aren’t making a political statement. Politics is a media focus.
How many of those houses (both single and multi) are in high tax, high crime locales? If profits get divided between politicians and drug addicts, why would anyone else be interested?
If the local municipality (P&Z and DA) actually controls the property’s use, not the owner, why would anyone else be interested? Pay higher and higher property taxes, submit to endless regulatory abuse, and lose money?
Not sure if single vs multi-family is really a factor, but if so, that is secondary to property rights issues.
The new housing trend is favelas and tent cities.
“Bidenomics is working!” -CNN, probably…
“Expect more housing weakness, even single-family.”
Not happening in CT/MA. The frenzied bidding wars continue and housing is going parabolic. Prices increasing at a 30% annualized rate in my area. Not enough houses for sale here to meet demand and I don’t see that changing until interest rates go way down.
Where do you live?
Agree. I have a home in Wellesley. The bidding is fast and furious. I pinch myself every day.
“Subprime is contained.”
Real estate investors can’t push rents high enough to justify borrowing to build and pay higher anticipated taxes because renters budgets are already stretched thin.
Another sign of the effects of income inequality. The higher end of the market is doing well because many buyers are much less sensitive to mortgage rates. The lower end is collapsing. Aggregate numbers hide the story of a 2-lanes economy, and this is a problem because it blinds monetary policy.
This is the main problem for the economy. Most every sector. The upper 10% (often including retirees and government employees in many places) are doing well and gaining asset appreciation. Most of the rest are paycheck to paycheck and raising rent will only reduce demand. They have no assets to appreciate and see only rising prices for necessities. We can’t run very long with a two-tiered economy. It can happen here.
Short time horizon is the human condition. Pay them as much as $20/hour to flip burgers in California and 90% would have too much month left at the end of the money.
There are some that are living paycheck to paycheck because they don’t spend their money wisely. (i.e. they have nice smart phones, get their nails and/or hair done, have their groceries delivered to their car, go out to eat, etc.) They’re not saving for the future.
French Revo 2.0.
Will be delicious
The Aristocrat’s and Oligarchs would be wise to stand up for and join the masses before they too lose their heads in the revo
The people who lack housing can afford only tar paper shacks or camper vans. The post WWII industrial monopoly gravy train has left the station. American labor is as talented as and worth the same as third world labor. The standard of living must adjust to reality. Hyper inflation is doing the adjusting.
The talk about hyperinflation is misguided.
The USA is not even remotely close to hyperinflation. An inflation rate of 2, 5, 10 or even 20 percent annually isn’t hyperinflation.
An inflation rate of 1000 percent would be hyperinflation. The USA isn’t going to have that. We are not Zimbabwe.
I do expect an inflation rate of 5% or higher in coming years, and that is going to finally force a budget showdown that will result (IMHO) in higher taxes on the rich, and lower benefits for those receiving transfer payments.
I’m investing accordinging, in inflation hedges like real estate and gold miners. Unforutnately, my main miner Barrick Gold, had some bad news this week about one of their best mines and the stock tanked.
Daniel, have you gotten the idea that looking at a Stock Chart would have prevented you from Buying Barrick in the 1st place. Just sayin’.
If I could share a chart here, then I would. It has been being shorted since it rose back up to $31. That was in Aug 2020.
Price action tells me that $6 is possible AGAIN, since price rose from there back in 2015.
I don’t follow historical data. I follow current data.
Barrick has had huge challenges the last 5 years due to oil, inflation, and their porgera mine which has now restarted.
They have shifted strategy and focused on more stable countries, reducing debt (Barrick is now essentially debt free) and increasing their copper margins.
If gold stays where it’s at, Newmont and Barrick will double their annual profits. If……and only if.
Gold miners are always a short term play. Long term they are sluggards, but in the short term, usually at the end of a rate hiking term, they rocket upwards, like I expect them to do.
“The metal or the miners?” is an often asked question. My problem with the miners is the massive shareprice dilution that is prevalent from constantly adding to the common stock float. Even successful mid-tier miners do this and coupled with large debt loads, it becomes a massive disincentive to own these companies.
@KGB – “…American labor is as talented as and worth the same as third world labor. The standard of living must adjust to reality.”
American labor may be on par with the rest of the world, but American labor has to also pay for American overhead. The US government is **FAR** more expensive for American labor than foreign government is to their labor. Not to mention, most foreign labor does not have electronic transactions that enable tax collection before its due — forcing American labor to waste time filling out 1040 tax forms to try to get a refund on over-collections.
America can compete on labor, but not on overhead