February 2024 Housing Starts: Single-Family Housing Starts Rise To Highest Level Since April 2022

• Building permits issued in February increased to 1,518,000 (SAAR). That’s 1.9% above the revised January rate and 2.4% higher than a year ago.
• Housing starts increased to 1,521,000 (SAAR) in February, up 10.7% from the revised January estimate and 5.9% higher than last February’s rate, according to the U.S. Census Bureau. 
• Single-family housing starts increased to 1,129,000 (SAAR) in February, up 11.6% from January and 34% above last February. Single-family construction drove most of the increase in housing starts in the past year.

What happened: As the spring shopping season got underway and buyer traffic resumed, builder confidence increased and construction on more single-family homes also began, with the pace of new construction reaching its highest level since April 2022. However, multi-family construction has slowed. With a near record number of apartment buildings currently under construction and slowing apartment rent growth, starts on multi-family construction are likely to remain subdued. While single-family starts are 34% higher than in February 2023, construction on buildings with 5 or more units fell 36% over the same period.

Why this matters: Despite rising mortgage rates, demographic factors as well as rising inflation-adjusted incomes and wealth continue to support housing demand. At the same time, the stock of existing homes that is currently available for sale remains 37% below pre-pandemic levels. The persistent housing shortage has supported growth in house prices. As a result, homebuilders have seized an opportunity to slowly chip away at the current housing shortage - despite significant headwinds. 

Even in a rising mortgage rate environment, builders have pivoted to building more efficiently, and continue to make the math work for potential homebuyers by offering various types of incentives. The share of builders offering some form of incentive - like a rate buydown - has remained between 58% and 62% since last September according to the National Association of Home Builders.