New housing starts skyrocketed in May by nearly 300,000 units from April. That's surprisingly good, but it comes on the back of a steady decline over the past year. I sometimes struggle to pick out the best way to show chart data in the most informative possible way, and this was one of those times. Percentage growth is misleading because the April number was close to zero, while month-over-month numbers are hard to read (either in units or percentages) because the series is so noisy. Willy nilly, I ended up doing a rolling 6-month average of the monthly change in units:
The basic story is the same no matter what series you use. The chart is just a way of illuminating it. Housing starts were high during the 2021/22 housing boom and then plummeted during the 2022/23 crash. But in May they suddenly spiked way upward.
For a little bit of context, here's a comparison of single-family starts vs. apartment starts:
It's only one month, so the change in single-family starts might be a fluke. But the jump in May was its second-biggest during the entire past decade. This suggests newfound optimism about the housing market, which is hard to attribute to anything other than a sense among investors that interest rates will fall over the 12 months or so.
What's the problem with showing the raw data - it shows a very nice rebound:
https://fred.stlouisfed.org/graph/fredgraph.png?g=16j56
Whether this is permanent is another question. There is still a housing shortage, but how could the higher mortgage rates not dampen housing? Those higher rates will probably mean another shift to bigger, pricier houses as lower-income people are excluded.
This is still the be-all, end-all chart. Total housing starts. https://fred.stlouisfed.org/series/HOUST
We're still insanely underbuilt from the Great Recession housing bust. And the effect it's having on housing prices, combined with the fact that housing became an investment asset that underpins so much of the on-paper wealth in our late stage capitalist economy... it almost makes the Great Recession look intentional. I'm sure it's just a happy accident, though. Happy for the wealthy and the haves/already-own-my-house people, anyway.
It's permanently locking out an increasing portion of the population from building lasting wealth.
What we’re the rates of housing starts the last time(s) interest rates were at their current levels? (Perhaps adjusted to population as the normalizer). I rather doubt they went to zero and stayed there until rates fell again.
Grr, there goes autocorrect again, “we’re” that should be “were.” Sometimes I wonder if the correct translation of AI isn’t Annoying Incessantly…
Single family housing tends to get sold to households. Multiple unit housing tends to get sold to investors. It looks like multiple unit housing took a hit during peak COVID, but caught up by 2022 and has continued its rising trend. It looks like COVID had more impact on investment properties but rising interest rates have had less.
You're showing housing starts (defined as the start of foundation excavation) which lags the purchase of the land by anywhere between 1-2 years or more. What you're seeing is a lagging response to the housing crunch and high rental rates from early last year.