Starts permits and completions from the Census Department, chart by Mish.

Please consider the New Residential Construction Report for March 2023 by the Census Department. 

Building Permits 

• Privately‐owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,413,000. 
• This is 8.8 percent below the revised February rate of 1,550,000 and is 24.8 percent below the March 2022 rate of 1,879,000. 
• Single‐family authorizations in March were at a rate of 818,000; this is 4.1 percent above the revised February figure of 786,000. 
• Authorizations of units in buildings with five units or more were at a rate of 543,000 in March. 

Housing Starts 

• Privately‐owned housing starts in March were at a seasonally adjusted annual rate of 1,420,000. 
• This is 0.8 percent (±13.0 percent) below the revised February estimate of 1,432,000 and is 17.2 percent (±9.1 percent) below the March 2022 rate of 1,716,000. 
• Single‐family housing starts in March were at a rate of 861,000; this is 2.7 percent (±14.4 percent) above the revised February figure of 838,000. 
• The March rate for units in buildings with five units or more was 542,000. 

Housing Completions 

• Privately‐owned housing completions in March were at a seasonally adjusted annual rate of 1,542,000. 
• This is 0.6 percent (±13.3 percent) below the revised February estimate of 1,552,000, but is 12.9 percent (±18.6 percent) above the March 2022 rate of 1,366,000. 
• Single‐family housing completions in March were at a rate of 1,050,000; this is 2.4 percent (±12.4 percent) above the revised February rate of 1,025,000. 
• The March rate for units in buildings with five units or more was 484,000. 

Housing Starts Single Family vs Multi-Family

Mortgage Rates 

Mortgage rates courtesy of Mortgage News Daily

As mortgage rates blasted higher in 2022, single-family housing crashed. 

In the past few months, mortgage rates stabilized a bit in a wide range of 6.0 percent to 7.0 percent. 

Also builders started offering rate buydowns which helped to stabilize housing starts. Regardless, homes are not affordable by any means. 

Housing will remain depressed, especially existing home sales that will not have mortgage rate buydowns.

Housing Units Under Construction 

There is a near-record number housing units under construction, most of which are multi-family. 

As these units finish construction, we will see some easing in the pace of rent increases. Outright rent declines are debatable.

CPI Shelter Remains Hot

Shelter and rent data from the BLS, chart by Mish.

Shelter Notes

• Shelter comprises 34.47 percent of the CPI
• Rent of primary residence is standard rent (not owner occupied), unfurnished without utilities.
• Owners' Equivalent Rent (OER), is the estimated price one would pay to rent one's own house, unfurnished and without utilities. It is the single largest CPI component at 25.41 percent.
• The shelter index increased 8.2 percent over the last year, accounting for over 60 percent of the total increase in all items less food and energy. 

Price of Shelter

Shelter has gone up at least 0.5 percent for 14 consecutive months dating to January 2022.

Most analysts have been expecting the price of shelter to come down. I have not been in that camp although we are getting closer to smaller increases.

For discussion, please see The Tame March CPI Numbers Deceive as the Price of Rent Surges Again

National Rent Price

All these "rent is declining" false dawns have been wrong for three reasons.

1. They are based on new leases, not existing leases.
2. They report increases all at once whereas the BLS smooths things out over a 12-month period due to the fact that not all leases renew in the same month.
3. Seasonality

In the months ahead we may finally see rents ease due to the fact there are a record number of apartments under construction. Just don't expect to see declines.

Meanwhile, the price of crude has taken off. Don't expect energy to be another big savior in the April CPI report.

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