Housing Starts Ease a Bit in January but Remain Mostly Encouraging

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The Census Bureau and the U.S. Department of Housing and Urban Development said that new housing starts declined 2.6 percent in January, pulling back a bit after rebounding by 11.3 percent in December. New residential construction activity dropped from an annualized 1,279,000 in December to 1,246,000 in January. Another positive sign was the fact that housing starts have now exceeded 1.2 million in three of the past four months – a psychological threshold that we have struggled to maintain each time. Despite the easing in this report, housing market data remains mostly encouraging, up 10.5 percent over the past 12 months from 1,128,000 in January 2016. Indeed, much of the recent volatility has come from the multifamily segment, ranging from 271,000 units in September to 471,000 in December. In this release, multifamily starts decreased to 423,000 units, up 19.8 percent year-over-year from 353,000 units one year ago.

On the other hand, single-family housing starts have more consistently drifted higher, even with a slight lull in both November and December. Single-family starts rose from 808,000 in December to 823,000 in January. While this was lower than the 868,000 units started in October, its fastest pace since October 2007, the current data represent progress from 775,000 units in January 2016, a year-over-year gain of 6.2 percent.

The latest housing permits figures were also promising. Permitting for new residential units rose from 1,228,000 units at the annual rate in December to 1,285,000 in January, a 14-month high. It was also the fifth straight month with permits exceeding 1.2 million units, which was reassuring. With that said, the increase in permits in January came from the multifamily segment, up from 398,000 to 477,000. In contrast, single-family permits declined from 830,000 to 808,000. New residential construction permits have continued to move upward over the past year. Over the course of the past 12 months, housing permits have risen 8.2 percent, up from 1,188,000 units in January 2016, with single-family and multifamily activity up 11.1 percent and 3.5 percent, respectively.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM), where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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