Silver Lining to Housing Market Slowdown
The nation’s housing market is slowing down, despite a rise in single-family construction. And that is not all bad news for St. Johns County.
According to the latest home construction statistics from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, total housing starts for 2022 were 1.55 million, down 3% from the previous year. Single-family starts were down nearly 11% by multifamily construction rose more than 14% in 2022.
In December single-family starts did post a double-digit gain of more than 11%, but industry experts still see a slowing of the market in 2023.
“Even though single-family starts are up on a monthly basis, permits indicated that the housing market will slow down further in 2023,” said Jerry Kotner, chairman of the National Association of Home Builders, in a media release. “We expect a sustainable decline for mortgage rates in the second half of this year which should lead to a housing recovery in 2024.”
A slower housing market will help ease some headwinds facing homebuilders, according to Seth Kelley, past chairman of the St. Johns Builders Council and vice president of purchasing at MasterCraft Builder Group.
“That slowdown is not without a silver lining,” he said. “With it should follow lesser demands on supplies, labor and land, which in turn will help cool off the super-heated construction costs, which led to the same on the retail pricing side to homebuyers.”
Kelley said one of the biggest reasons for the overall decline in single-family construction in St. Johns County is a lack of available lots to build on.
“Land in desirable areas is becoming harder to procure, harder to obtain zoning and commission approval, as well as being more expensive to develop,” he said.
Kelley said while a slowdown is likely in 2023, overall the industry is healthy and has recovered in some ways from issues related to the Covid-19 pandemic.
“Several of us in the homebuilding industry as well as the economic analysis sector refer to 2019’s numbers as our last benchmark for a ‘normal’ year,” he said. “In St. Johns County there were a total of 4,077 single-family home permits that year, so even though 2022 saw a decrease compared to 2021, it is still a 32% increase over what we had in 2019.”
Kelley said an ongoing lack of available home inventory is another factor to consider when assessing the health of the housing market. He said the six-month inventory supply for St. Johns County is half of what is considered normal, according to statistics from the Northeast Florida Association of Realtors.
“This means that we are still underbuilt to regular demand, which means there is still opportunity for home sales,” he said.