Single family housing construction and permit applications for for single family homes have fallen for first time in 11 years. Another pullback is likely in 2023 amid inflation and rising interest rates. Meanwhile high costs for labor and materials have made it more difficult for builders to stay profitable and also create incentives to entice buyers.
In January 2022, single-family housing starts were running at a seasonally adjusted annual pace of about 1.16 when a 30-year mortgage was at about 4%. By October, starts had dropped to a seasonally adjusted annual pace of 855,000, as long-term mortgage rates had risen above 7% for the first time in two decades.
Single-family home construction had risen steadily since 2012, before surging during the first two years of the pandemic as ultra-low mortgage rates fueled demand.