Economists' Outlook

Housing stats and analysis from NAR's research experts.

Instant Reaction: Housing Starts, August 16, 2022

Construction starts of both single-family and multifamily housing units fell in July. The decline in single-family starts to 916,000 annualized units is the lowest since the COVID-19 lockdown months in the spring of 2020 and essentially matches the annual total of 888,000 in 2019 before the pandemic. The decline in multifamily starts to 530,000 (from 580,000 in the prior month) could be just the normal month-to-month volatility in apartment buildings. What is important is that multifamily construction is on pace this year to reach the highest activity in more than 30 years. Rapidly rising rents are economic incentives for building rental housing.

Homebuilders are naturally very cautious about rising unsold inventory during the construction phase. But those completed homes are finding buyers within three months, which is relatively swift for the new homes market. Improving conditions within the supply chain for the delivery of items such as lumber and appliances will lessen overall uncertainty. Moreover, demographics still suggest a sizable housing shortage. If mortgage rates remain near 5%, after reaching 6% in early June, there could be renewed buyer activity and additional inventory declines. Half of existing homes can still command the full listing price.

Line graph: Monthly Single-family Housing Starts, January 2019 to July 2022
Line graph: Monthly Multifamily Housing Starts, January 2019 to July 2022
Bar graph: Forecast of Multifamily Starts and Single-family Starts, 2000 to 2021
Line graph: Supply of New Homes, January 2020 to May 2022
Line graph: Wholesale Inventory of Lumber and Construction Materials, January 2015 to January 2022