Housing Starts Slip Again, but is There a Silver Lining?

The U.S. Census Bureau and the Department of Housing and Urban Development on Wednesday jointly released new residential construction statistics for January 2016, and the numbers are encouraging, if not remarkable.

Much of the caution in this cautious optimism stems from the fact that January is typically the slowest month for new construction starts and not necessarily a good prism through which to view new-start trends, according to Realtor.com Chief Economist Jonathan Smoke.

Still, the numbers are the best 12-month-overall figures in almost a decade, showing that privately-owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 1,202,000. This is a mere 0.2 percent below the revised December rate of 1,204,000, but is 13.5 percent above the January 2015 estimate of 1,059,000.

Single-family authorizations in January occurred at a rate of 720,000, which is 1.6 percent below December’s of 732,000. Meanwhile, privately-owned housing starts in January were at a seasonally adjusted annual rate of 1,099,000, 3.8 percent December’s estimate of 1,143,000, but also is 1.8 percent higher than in January of 2015.

There were 731,000 single-family housing starts in January, 4 percent lower than in December, while there were 1.5 million privately-owned housing completions in January, which is down 2 percent from December but 8.4 percent over the year prior.

“The key findings from today’s report is that month-to-month we’re seeing little change in new construction, but year-over-year there is solid growth,” Smoke said.  “In addition, permits remain higher than starts, which is a good sign for expansion ahead.”

Ralph McLaughlin, Chief Economist at Trulia, said that “the 12-month rolling total of new housing starts continues to grow, and the February 2015 to January 2016 period represents the best 12-month span for starts since July 2008.” Moreover, he said, a share of new starts, led by development in the South, hovers around a 42-year high.

According to the McLaughlin, the South saw 556,700 new starts over the past 12 months, though the Northeast led the country in year-over-year growth, increasing by 30.2 percent.

 

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