Building Permits Fall Well Below Housing Starts For First Time in Over 2 Years

Housing Starts, the jargon word used to refer to the inception of new residential construction, have a fairly logical relationship with building permits. The latter tends to run a bit higher on average since the Great Financial Crisis, but there has been plenty of overlap. Since the start of the pandemic, however, building permits opened up a clear lead on housing starts and never looked back--at least not until today's data came out. Granted, there was one month in the middle of 2021 where starts eclipsed permits by a few thousand units, but that was nothing compared to today's gap of 85k. Long story short, the orange line finally fell well below the blue line: Does this tell us anything we didn't already know about the housing market? Not really. Post-covid labor/material challenges made it impossible for construction to start as quickly as builders pulled permits. The higher permitting levels spoke to the incredibly tight housing market. With things shifting abruptly in 2022, it's a surprise that we didn't see the more forward-looking permit numbers fall sooner. It was an especially big drop for multifamily permits (5 or more units) which dropped 18% month-over month while single unit permits only declined 7.1%. Incidentally, the 2-4 unit sector has been the most stable (UP 2.0% month over month and 8.3% year-over-year), but also only a tenth of the size of the 5+ unit market. While multifamily permits may be down in year over year terms as well, builders continue to clear the backlog based on housing starts. For instance, Y/Y permits for 5+ units are down just over 10%, but Y/Y housing starts for 5+ units are UP 24.5%. Contrast that to single family housing starts which are down 32.1%.

December 20, 2022 Download our Mobile App: Download our Mobile App: Housing News Building Permits Fall Well Below Housing Starts For First Time in Over 2 Years Housing Starts, the jargon word used to refer to the inception of new residential construction, have a fairly logical relationship with building permits. The latter tends to run a bit higher on average since the Great Financial Crisis, but ther... (read more) Mortgage Rate Watch Rates Near 1-Month Highs After Hitting Longer-Term Lows a Few Days Ago What a difference a few days have made for mortgage rates, and in this case, not a good difference. The average lender was offering the lowest rates in more than 3 months as of last Thursday. Now 3 business days later, we're close to the ... (read more) MBS Commentary Does Japan's New Rate Policy Change Anything For Us? Does Japan's New Rate Policy Change Anything For Us? Today's dominant market mover occurred in Japan early in the overnight trading session. The Bank of Japan (BOJ) made a change to its rate targeting p... (read more) Rob Chrisman Subservicer Oversight, Automated Marketing, Hedging, Non-Agency, QC Tools; Credit Companies Feeling the Squeeze Takeover and M&A rumors continue to swirl, and smarter companies are merely hiring production staff away from lenders rather than pay the baggage that may be associated with the target while some are selling servicing to help strategically or wit... (read more) Mortgage Rates 30 Yr. Fixed Rate 6.38% +0.11% Rate Change Points Mortgage News Daily 30 Yr. Fixed 6.38% +0.11 0.00 15 Yr. Fixed 5.54% +0.02 0.00 30 Yr. FHA 5.89% +0.11 0.00 30 Yr. Jumbo 5.52% +0.02 0.00 5/1 ARM 5.95% +0.11 0.00 30 Yr. VA 5.95% +0.13 0.00 Updates Daily - Last Update: 12/20 15 Yr. Fixed Rate 5.54% +0.02% Rate Change Points Freddie Mac 30 Yr. Fixed 6.31% -0.02 0.00 15 Yr. Fixed 5.54% -0.13 0.00 Updates Weekly - Last Update: 12/15 Rate Change Points Mortgage Bankers Assoc. 30 Yr. Fixed 6.42% +0.01 0.64 15 Yr. Fixed 5.92% +0.08 0.54 30 Yr. Jumbo 6.14% +0.06 0.42 Updates Weekly - Last Update: 12/14 MBS / Treasuries UMBS 30YR 5.0 99.44 -0.42 Price / Yield Change MBS UMBS 5.0 99.44 -0.42 UMBS 5.5 100.92 -0.23 GNMA 5.0 99.64 -0.41 GNMA 5.5 100.78 -0.14 Pricing as of: 12/20 5:31PM EST 10 Year US Treasury 3.6881 +0.0981 Price / Yield Change US Treasury 2 YR Treasury 4.260 -0.005 5 YR Treasury 3.791 +0.072 7 YR Treasury 3.777 +0.095 10 YR Treasury 3.688 +0.098 30 YR Treasury 3.745 +0.109 Pricing as of: 12/20 5:31PM EST Latest Video A housing recession has been underway for months, says Sheryl Palmer CEO Ta... Former Fed Vice Chair Roger Ferguson weighs in on Bank of Japan's bond yiel... U.S. housing starts declined 0.5% in November vs. 1.8% estimate Building permits down due to high construction costs and interest rates Around the Web CNBC Bill Gross says markets are headed for 'potential chaos' if interest rates keep going up CNBC Rents are still high, even after cooling at the fastest pace in 19 months Calculated Risk Blog November Housing Starts: Record Number of Housing Units Under Construction Calculated Risk Blog 4th Look at Local Housing Markets in November; California Sales off 48% YoY Eye on Housing Single-Family Production Continues to Decline, Multifamily Permits Weakening CNBC Homebuilder sentiment drops for the 12th straight month, but a bottom may be near Calculated Risk Blog Housing Starts Decreased to 1.427 million Annual Rate in November Calculated Risk Blog CoreLogic: "Annual Single-Family Rent Price Growth Falls to Single Digits in October" CNBC Nikkei 225 falls more than 2% after Bank of Japan widens yield target range, yen strengthens Calculated Risk Blog Housing December 19th Weekly Update: Inventory Decreased 2.5% Week-over-week Calculated Risk Blog Four High Frequency Indicators for the Economy CNBC Treasury yields rise as investors assess monetary policy, economic outlook CNBC European markets head for lower open as investors assess interest rate outlook

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