August 2022 Residential Construction – U.S. Census Bureau

Each month the United States Census Bureau releases a report on new residential construction in which they track units permitted, units authorized but not started, units started, units under construction, and units completed. Units permitted is a leading indicator for the US economy and provides a sample picture for an economic forecast. While it is not the only indicator it is  the most useful in this report.  

In August of 2022 the total number of permits granted fell by -10% from July of 2022 and -14.4% from August of 2021. In the period from July ‘22 to August ‘22 we see single family homes permitted falling by –3.5% while multi-family developments have seen permits fall by –18.5%. Over the 1-year period we see single-family homes and multi-family developments falling by -15.3% and -13.7% respectively.  

Of units authorized but not started we see a month-to-month decrease of -2.7%, but a 1-year increase of +10.7%. This increased delay we see as being driven primarily by breaks in the supply chain and the lack of available materials. However, these delays are not spread equally throughout the new housing market. Single-family houses are moving from permitting to construction faster than last year with authorized units not started falling -4.7%. Multi-family units are taking much longer to complete, increasing +31.2% from last August.  

Units started increased +12.2% from July 2022, up +3.4% in the single-family markets and +28.6% in the multi-family development market. Over the 1 year we see single-family home starts down –14.6% confirming that the single-family home market is indeed cooling off as less permits are being sought, we expect to see less construction starting as well. Multi-family developments are up +31% this year from August 2021. 

Completions are down -5.4% from last month, but up -3.1% from last year. The single-family market has seen a small rise in completions from last month up +0.4% and +6.5% from August 2021 but the multi-family market has seen a marked decline in completions, down –20.7% from last month and -6.7% from August 2021. Overall, this suggests that the single-family market continues to cool off but also the volatility in the multi-family market suggests developers have varying opinions on the future of the economy.