The number of housing units under construction is collapsing. Units completed for sale has peaked. What’s ahead?
Units Under Construction Details
- The number of housing units under construction has collapsed from 1.71 million to 1.43 million.
- Housing units under construction is down 16.4 percent form the recent peak. However, 1.43 million is an exceptionally high number historically, only topped in two prior surges since 1970.
- The number of multi-family units under construction has collapsed from 1.02 million to 801,000. That’s a decline of 21.5 percent.
- However, 801,000 is an exceptionally high number historically, only topped September of 1973.
- The number of single-family units is down from a recent peak of 829,000 to 641,000. This is not a particularly high or low number.
Housing Units Under Construction and Completed
The graph is a bit misleading because completed units are annualized while units under construction are not.
Housing Units Under Construction and Completed Detail
Housing units under construction is plunging fast. But it is still a massive 1.43 million.
The number of completed units (for sale or for rent) is 1.544 million (seasonally adjusted, annualized). So the real number is more like 1/12th of that, approximately 129 thousand.
The number of completed single-family units (generally for sale) is 948,000 (seasonally adjusted, annualized). So the real number is more like 1/12th of that, approximately 79 thousand. This will pressure home prices a bit, but it’s not an exceptional number historically.
The number of completed multi-family units is 596,000 (seasonally adjusted, annualized). So the real number is more like 1/12th of that, approximately 50 thousand. This is a very high number historically, relatively speaking, and may pressure condo prices or rent, but not necessarily single-family home prices.
Home Prices Rise Again, Up 50 Percent Since 2020
On December 31, I noted Home Prices Rise Again, Up 50 Percent Since 2020, Double the Increase of Rent
Would be buyers can definitely curse the Fed over this housing debacle.
Percentage Increase Since January 2020
- Case-Shiller National Index: +50.9%
- Case-Shiller 10-City Index: +50.3%
- Consumer Price Index (CPI): +21.1%
- OER is the BLS measure Owners’ Equivalent Rent, the price one would pay to rent their own house in lieu of owning it. +27.5%
- Rent of Primary Residence: +25.6%
Don’t worry. We don’t call this inflation. We pretend it’s not there or that it doesn’t matter if someone sees it.
The S&P CoreLogic Case-Shiller is a lagging indicator though.
The Case-Shiller Home Price Indices are calculated monthly using a three-month moving average. Index levels are published with a two-month lag and are released at 9 am EST on the last Tuesday of every month.
The December report is as of October, representing August, September, and October.
What About Immigration?
With millions of illegal immigrants pouring over the border (soon to stop), there has been a huge need for more shelter.
This has pressured housing prices and especially multi-family rent.
If Trump puts an immediate halt to the migration surge, the completion of 1.43 million units under construction will pressure both home prices and rent, depending of course on local conditions.
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“With millions of illegal immigrants pouring over the border (soon to stop), there has been a huge need for more shelter.”
Maura Healey, democrat governor of MA who pledged to do everything in her power to stop deportation efforts, has had a sudden change of tune just days before Trump’s return to the White House. In a significant change to policy, Healey is requiring all immigrants to be “legally” in the country (whatever that means to her), in order to receive free shelter.
Contrary to popular belief, I believe government supported housing transcends hotel rooms and public shelters to include private housing. This is sparking a significant increase in demand. Once this form of public assistance and its associated costs is exposed, I expect more fallout in these sanctuary cities.
are you cranking in the number of houses that just burned down…….
just 12,000 … a mere pittance for the USA but not for the house owners.
While 200,000 homeless roam California for next meal/snort.
Many of them meth-heads who love fire. Surprise, surprise.
Will definitely move the needle in the LA area, but probably a mere blip nationwide. They will be transitioning to new permanent shelters slowly over the course of say a half a year, easy. Even if a quarter, 2500 decide to leave the State, divide 2500 families by say the 10 largest metros and that’s not a terrible amount of demand.
Housing prices and rents have defied most logic over the last 5 years. I applaud your attempts … but there are clearly some factors that are not being factored into the models.
Free money is magical, and once we rid ourselves of Powell and the debt ceiling, the magic will return! Golden Age, baybee!
While there certainly has been lots of “free money” roaming around … we’re spending $110K/year per migrant family on hotel only in NYC … but at least they get turn down service et al. These reservations are for 60 days only, but the folks are on podcasts showing how they just have to keep applying and many are there for over a year with no plan to leave. As for housing, I’m guessing you’re talking largely about the low interest rates … we shall see.
Chocolate or churrio on pillow?
Not for long. In a matter of weeks they will be pneumatically catapulted back to their country of origin using modified hyper loop technology.
It’s going to get a lot whiter around here.
Even better than hyperloop:
https://en.wikipedia.org/wiki/SpinLaunch
I’m a MAG-hat myself and I’m not expecting appreciable deportations. A lot of encouraging to leave, a lot of DIScouraging to come, and a semi-sealed border. But even Trump’s people understand there’s a demographic cliff approaching.
House price increases are absolutely logical. The Fed doubled the monetary base over ~2 years (& has since only removed ~12%). And since the freshly minted money enters the system as fake savings, artificially lowering interest rates, the inflation goes 1st to assets people borrow money to buy, to wit, homes. Add to that the cancer of ever-growing regulation adding to the cost of homebuilding.
Now if you want to say OER is squirrelly, I’m with you.
Not logical at all, at least not without a significant deflationary bust coming first. Common sense, if the price of food, energy, insurance and everything else lurches up 30, 50, 80%, but wages don’t, then something has to give in the monthly budget. The things that can give are housing (you can always sell your house and move to a cheaper home/area, and if you rent, you can always downgrade your apartment. Cars work similarly. You need a car to go to work, but you don’t need a NICE car. So those two areas logically deflate due to inflation in the necessities. But eventually, yes, inflation will make those things move up and to the right as well. But we have not yet experienced the bust in housing and autos that logically should follow any serious and rapid bout of inflation. And no, there aren’t enough deep-pocketed price insensitive folks out there to hold up ENTIRE markets, at least not once supply levels normalize.
Only point is that folks are preferring record level debt to downsizing cars or houses. Eventually this will fall apart (unless you’re the gov’t and can print money) … but maybe the reason for less crashes thus far is that Americans (and really the whole west) are so soft that they are unwilling to make the sacrifices necessary to live within means.
The inflation affect certainly was not immediate … but I can see it. As for regulations … yes regulations on building are egregious … but so are regulations on fixing up houses. I have several times bought homes that were uninhabitable and turned them into nice homes. In my book, this is as good for the housing supply as building a new house. The majority of my costs were directly or indirectly tied to regulation … that and the delays. When I do a rental turnover and the repairs are smaller (the county still believes I should come to them and do permitting and inspections and other extortion) … it can be much quicker and less expensive.
The factor is the government. Instead of allowing foreclosures to happen, modifications and work-outs are automatic. then, when the loans do go bad, they package them up and sell them at a huge loss to hedge funds. Hooray the clueless taxpayer gets to pay for the stealth bailouts and young people get to pay by housing inventory being held artificially low and distressed sales being nonexistent. Then there’s the rate lock in effect, that’s another historically aberrational factor keeping prices up for longer than the math says they should.
Agree. gov’t bailouts are so common now that when someone does NOT get one, it is seen as being slighted. In Florida in 2008 … they let the market crash hard (homes that were originally $250K were now $60K). Those same homes are now $450K … because the recovery was real.
House price increases not in the CPI. That is the real story.
And oh yes, 15 new million illegal aliens driving up rent prices, government aided, with no vote by the citizens if the illegal invasion could legally occur.
The must, and will be served at the lowest possible cost.
That is why 15 million illegals arrived illegally.
You act like we asked them to come up here. Maduro and his cronies probably gave them two choices: die or leave. What would you choose? And what kind of immigrant would you be if you had no choice?
Folks who interviewed these folks down in Panama (at the gap) found 0% were under duress … all were looking either for work or welfare. When they get to the border they all say “I need asylum and will be killed if I go back” because that is what they’ve been taught to say since it is a “get into US free” card. It is the illegal immigrant of the “I feared for my life” firearms owner statement. All taught to say it. Meduro did empty his prisons and told the prisoners that he didn’t want them back … but that is a little different, and the reason why so much of the crime is tied to Venezuelan gangs. i wonder if any country around the globe would be interested in our prison populations?
I know theyd be interested in the 3 year olds. They were all on the street with mamacita begging the last 18 months here in Chicago. Youre just not having enough kids, Mike. 🙂 I guess we’d have to ask them if they came up here cause it sounded like a good idea (all million of them at the same time), or if there was no food and the government couldnt care less.
So we’re now the global welfare provider:
https://www.youtube.com/watch?v=LPjzfGChGlE
Every Real American should have as many kids as possible. I myself am on record saying that if I were a woman, I’d have had 30 babies by now.
I’d also like to be called Loretta.
It don’t make no difference to me
Everybody’s had to fight to be free
I said you don’t have
to live like a refugee
Immigration would never have been a problem if our biggest MSM outlet wasn’t screaming daily the borders were open.
If there’s not a problem to scare the masses into voting for you with, create one. It works almost every time.
Try almost 30 million
The northeast U.S. has received a disproportionate number of international immigrants – both legal and illegal, which has caused house prices and rents to basically skyrocket in the last 5 years.
Who wants to live in high tax and over-crowded New Jersey? Not me, but the immigrants seem to love it.
But new house construction in the northeast is not like places in Texas that continually expand into undeveloped land.
New Jersey = NY and Italians. Real Italian pizza!
NE US – couldn’t happen to a better place. Stuff the Ivy League and NESCAC dorms with them.
Trump on the 20th = zero percent interest rates = more hedge funds and private equity continuing to buy up America with free money (0% money), including stocks, bonds and real estate = why build any more houses until the 10 year goes up and stays up, which it wont.
I will own everything, and be happy!