Housing Starts Dec 2024: Good Numbers, Multifamily Ricochet

Housing starts cast another vote for a favorable economy story in both single family and the lumpy multifamily.

Jan 17, 2025

The housing starts number is an important macro variable as the market looks for signs of any setbacks with mortgage rates back in the 7% area and what that means for a multiplier effect industry such as homebuilding. The weekly Freddie Mac benchmark finally cracked the 7.0% line yesterday after lagging some other surveys to the 7% handle.
Single family starts were steady at +3.3% MoM and -2.6% YoY with the important South region (59% of total single family starts) flat MoM and -1.8% YoY. Single family permits moved slightly MoM (+1.6%) and YoY (-2.5%) on a SAAR basis.
Not Seasonally Adjusted (NSA) single family starts YTD were +6.5% while NSA single family permits on a YTD basis were +6.6%. Total NSA starts stood at -3.9% YTD as multifamily keeps that number in negative range.
Multifamily is always lumpy, but this was an especially big lump at +58.9% MoM and -11.3% YoY on a SAAR basis. NSA multifamily starts YTD were -26.6%.

The above chart updates the long-term single family starts time series, and the current print of 1050K remains above the long-term median. Across the other timeline medians, we see the bull markets of 1980s/1990s modestly higher at the median with the housing bubble cycle more materially above the current period with the 1312K median during the housing boom (peaked at 1823K in Jan 2006).

The Not Seasonally Adjusted (NSA) numbers for permits and starts were cited in the bullets above with total starts and total permits both sequentially higher MoM. For single family only, the NSA rate was slightly lower for starts and slightly higher for permits. The pace remains well below the 2021-2022 high points when mortgage rates were much more favorable.

The NSA starts count for single family by region shows downticks for all regions. The South as always is the key driver at 61% of total NSA single family starts.

Multifamily posted 418K starts for Dec on a SAAR basis, and that amounted to a +58.9% spike from Nov 2024 but still down by -11.3% YoY. The 418K number is ahead of the long-term median and most of the timeline medians posted in the chart with the exception of the 1960 to early 1970s boom driven by postwar demographics, urbanization, and racial migration heading north.

The multifamily permit story at 437K is ahead of the long-term median of 395K, so that is a steady, high absolute volume in a period where the acute shortage of affordable housing in the entry level tier has been hit by mortgage rates while demographics and its effect on demand is full speed ahead.

There really is no viable, realistic plan to deal with the supply shortage issues. There is no shortage of rhetoric, however, but any solution needs the complete involvement of the Federal, State and Local level as well as the homebuilders. You can go to the NAHB website and see their checklist of what needs to be done. Then you can ask to what extent such recommendations are in place by region. The situation in LA and the tragic destruction of so many homes by fire will increase the attention on housing, but budget priorities in Washington have a very long list.

See also:

Housing:

Footnotes & Flashbacks: State of Yields 1-12-25

New Home Sales: Thanksgiving Delivered, What About Christmas? 12-23-24

Existing Home Sales Nov 2024: Mortgage Vice Tightens Again 12-19-24

Housing Starts Nov 2024: YoY Fade in Single Family, Solid Sequentially 12-18-24

Homebuilders:

KB Home 4Q24: Strong Finish Despite Mortgage Rates 1-14-25

Toll Brothers: Rich Get Richer 12-12-24

PulteGroup 3Q24: Pushing through Rate Challenges 10-23-24

KB Home: Steady Growth, Slower Motion 9-26-24

Lennar: Bulletproof Credit Despite Margin Squeeze 9-23-24