Decline in Permits Indicates Strength is Overstated
Source: Economics Group of Wells Fargo Bank, N.A.
Summary
Total Gain Boosted by Volatile Multifamily Category
Residential construction ended 2024 on a positive note. Total housing starts surprised to the upside and surged 15.8%, more than offsetting the decline posted in the month prior. Both single family and multifamily construction improved during the month. The jump in overall starts, however, largely was owed to an eye-catching 61.5% rise in multifamily starts, a category which is highly volatile on a monthly basis.
A slight decline in total permits paints a less-rosy picture for residential construction. Single-family permits increased solidly during December, however, much of the gain was attributed to a rise in the hurricane-impacted South region. Overall, the trend in single-family has been essentially flat over the past several months as high mortgage rates and elevated inventory levels continue as headwinds for construction. Meanwhile, multifamily permits fell 5.0% during the month, dashing hopes that the jump in starts is an inflection point for multifamily development still weighed down by tight credit and soft apartment market conditions.