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New construction activity for both single-family and multifamily residential projects slowed during January 2022 despite an increase in permitting, Realtor.com reports. Housing starts were up 1% year-over-year, but down 4% from December 2021 at a seasonally-adjusted annual rate of 1.64 million. Economists and market experts initially expected January housing starts to hit a pace of 1.69 million and building permits to reach a median pace of 1.75 million.
Rising costs of building materials and other pandemic-related obstacles are to blame for the January slowdown, pushing builders to finish existing projects before starting new ones. A recent rise in mortgage rates could lead to a sustained softening in demand over the coming months, especially as the supply of existing homes for sale hits a new low and newly-built homes become more expensive.
In the Northeast, housing starts rose overall, but single-family starts fell by nearly 26%. Meanwhile, in the West, both total housing starts and single-family starts increased by upwards of 15%. Starts declined overall in both the Midwest and South.
The slight uptick in building permits was entirely driven by a roughly 7% rise in single-family permits that were issued. The numbers of permits for multifamily projects declined. Here, too, there was a high degree of variability on a regional level.
