- Housing Starts rose 2.2% in April 2023 versus March
- Single-Family Building Permit Issuance was up 3.1% for April 2023
- Total Building Permit Issuance, including Multifamily, declined by 1.5% in April 2023 on 5+ unit structures
- Single-Family Completions slipped in April 2023 to 971,000 after 3 consecutive monthly gains to start the year
New residential construction activity, as published by the U.S. Bureau of Census, followed improving homebuilder confidence higher in April 2023 – especially in the single-family market. Building Permit issuance for single-family homes nationally was up by 3.1% for the month, rising to 855,000 units. This is the strongest permit issuance number for the U.S.’s dramatically undersupplied single-family housing market since September 2022 (865,000). Gains were seen across all geographic regions in April but were strongest in percentage terms in the Midwest region (+4.9%).
Residential construction started also bounced back in April 2023 after receding slightly in the month prior. Both total and single-family housing starts rose for the month, up by 2.2% and 1.6%, respectively. There is discussion of the U.S. housing market finding a bottom as mortgage rates at least cease the relentless rise seen over the past 18 months and the U.S. labor market remains healthy. Homebuilders have expressed confidence through the National Association of Home Builders Housing Market Index (HMI), in association with Wells Fargo.
HMI has risen in every month of 2023 thus far, through May, with builders seeing their strongest rebound in prospects in the West region of the U.S. Given the volatility of local housing markets in many parts of the West region, sharp gains in builder confidence offers hope that there is a bottom in sight for falling home values and declining homebuying activity. At April’s 846,000 units annualized pace, Housing Starts have a long way to go to regain the 1 million plus levels seen throughout 2021. But a housing market bottom does appear to be in sight thanks to limited supply and the attractiveness that offers to builders.
PNC continues to forecast a recession to begin in late 2023. The U.S. labor market’s tightness and continued hiring, however, suggests that the downturn may not cost as many jobs as have been endured through past recessions. Businesses across industries have had difficulty finding qualified workers throughout the post-pandemic recovery and may be reluctant to layoff in all but the most overextended industries (e.g., tech) for fear of again not being able to find workers on the other side of the downturn. Should the unemployment rate see only modest increases – PNC expects a gain only to 5.2% – further hollowing out of housing demand on the heels of 2022’s collapse could be tempered. Homebuilder confidence certainly appears to be indicating this view, in combination with the inventory of existing homes for sale being limited by homeowners staying put and avoiding taking on a higher interest rate with a new purchase.
The PNC Financial Services Group, Inc. is one of the largest diversified financial services institutions in the United States, organized around its customers and communities for strong relationships and local delivery of retail and business banking including a full range of lending products; specialized services for corporations and government entities, including corporate banking, real estate finance, and asset-based lending; wealth management and asset management. For information about PNC, visit www.pnc.com.
