One of the biggest problems facing the housing and mortgage industries in 2016 was a lack of inventory – in particular, suitable “starter” homes for first-time home buyers. This lack of inventory resulted in home prices staying artificially high, which, in turn, shut many lower-income borrowers out of the market.
But as recent figures from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development show, housing starts were up significantly in 2016 compared with 2015 – although some might argue that home builders still aren’t keeping pace with demand.
An estimated 1,166 million housing units were started in 2016 – an increase of 4.9% compared with about 1.111 million in 2015, according to the estimates.
But as the figures show, most of that growth was in multifamily housing.
Housing starts as of the end of December were at a seasonally adjusted annual rate of 1.226 million, an increase of 11.3% compared with 1.102 million in November and an increase of 5.7% compared with 1.160 million in December 2015.
Starts of single-family homes were at a rate of 795,000 in December – a decrease of 4.0% compared with a revised 828,000 in November
Driving the increase in December was starts of multifamily units (five units or more per building), which were at a rate of about 417,000, an increase of 53.9% compared with about 271,000 in November.
Still, as the report shows, starts of multifamily units have been up and down on a month-over-month basis for the past year.
Building permits in December were at a seasonally adjusted annual rate of 1.210 million, a decrease of 0.2% compared with a revised 1.212 million in November but an increase of 0.7% compared with December 2015.
Permits for single-family homes were at a rate of 817,000, an increase of 4.7% compared with a revised 780,000 in November. Permits for multifamily homes were at a rate of 355,000 in December – a decrease of 10.1% compared with about 395,000 in November.
About 1.187 million housing units were authorized by building permits in 2016 – an increase of 0.4% compared with about 1.183 million in 2015.
An estimated 1.062 million housing units were completed in 2016 – an increase of 9.7% compared with 968,200 in 2015.
“Despite the slight dip in single-family production, December’s rate is still the fourth-highest, single-family pace since the Great Recession, and single-family starts also posted solid gains for the year,” says Granger MacDonald, chairman of the National Association of Home Builders (NAHB), in a statement. “Builders remain confident, and we expect further growth in the single-family market in the year ahead.”
“This report represents firm growth for housing in 2016, as single-family starts rose nine percent and multifamily production was down slightly,” adds Robert Dietz, chief economist for NAHB. “We expect that 2017 will be another year of gradual, steady improvement in the housing market. Multifamily starts have been volatile in recent months but should level off as supply meets demand. Meanwhile, single-family production continues to gain momentum but is limited by supply-side headwinds.”
Regionally, permits rose 3.3% in the West, 2.7% in the Northeast and 0.5% in the Midwest. The South saw permits decrease 2.9% compared with November.