January US Housing Starts Fall as Single-Family Units Continue Rise

Total housing starts dropped 2.6% in January, but single-family starts rose 1.9%; permit issuance continues to point in the direction of housing’s consensus forecasts for 2017

January US Housing Starts 02202017 58ab672981f73

Total U.S. housing starts fell 2.6% in January, but the seasonally adjusted annual rate of 1,246,000 units is 10.5% above the January 2016 rate. Multifamily starts were responsible for the entire drop, falling 7.9% to 421,000 units, while single-family starts rose 1.9% to an 823,000-unit annual rate.

Wells Fargo’s Economics Groups calls the 2.6% housing-starts drop “largely in line with expectations,” and adds that the volatile multifamily sector continues to show signs of cooling off.

“We continue to look for modest gains in homebuilding this year and expect overall starts to rise 6.3% to a 1.24 million-unit pace. Single-family starts should rise 10.1%,” according to Wells Fargo’s statement on the release of January housing numbers from U.S. Census Bureau and U.S. Department of Housing and Urban Development. In fact, the National Association of Home Builders (NAHB) expects U.S. housing-production growth to be primarily in single-family units in the year ahead, as multifamily production stabilizes.

“Permits for multifamily in January also showed strength, consistent with our forecast of the multifamily development market leveling off at elevated levels of production,” according to NAHB’s Eye on Housing blog related to the January housing numbers.

“Regionally, single-family starts posted month-over-month gains in all regions except the West, where the pace of monthly construction was down almost 19% from the December rate. Single-family permits also posted a decline in the West of 17%. These numbers are worth noting as new homes are typically more expensive in the West, and competitive pricing is a key concern in 2017 as mortgage interest rates increase.”


January Single Family Starts

Region

Month Change

January Starts*

Year-to-Date Change*

South

+9.6%

458,000

+9.6%

Northeast

+8.6%

63,000

-1.6%

Midwest

+6.3%

136,000

+5.4%

West

-18.6%

166,000

+5.7%

U.S. Total

+1.9%

823,000

+6.2%

* January starts are seasonally adjusted annual rates. Change in year-to-date starts based on monthly actuals vs. same period in the previous year.

 

January Multifamily* Starts

Region

Month Change

January Starts*

Year to Date*

Northeast

+135.3%

80,000

-4.8%

South

+47.8%

232,000

+50.6%

Midwest

-48.5%

52,000

+100.0%

West

-66.9%

59,000

-33.7%

U.S. Total

-13.0%

421,000

+25.7%

* Multifamily starts here include any building that comprise two or more housing units. January starts are seasonally adjusted annual rates. Change in year-to-date starts based on monthly actuals vs. same period in the previous year.

Privately owned housing units authorized by building permits in January rose 4.6% to a seasonally adjusted annual rate of 1,285,000 units. The rate is 8.2% above January 2016.

Single-family authorizations in January were at an 808,000-unit annual rate, 2.7% below the revised December figure. Permits issued for multifamily construction (five units or more) were 23.5% above December at an annual rate of 446,000.

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