January Housing Starts Down Slightly
Housing starts began the year with just a slight decline, HUD and the Census Bureau reported yesterday.
The report said privately owned housing starts came in at 1.246 million units in January, seasonally adjusted. This was 2.6 below December’s revised 1.279 million but improved by 10.5 percent from a year ago.
Single-family housing starts in January came in at 823,000; 1.9 percent higher than December’s revised 808,000. The January rate for units in buildings with five units or more fell by nearly 8 percent 421,000 from December’s revised 457,000.
Regionally, gains in the South and Northeast could not offset declines elsewhere. The South saw a 20 percent increase in housing starts, to 690,000 units seasonally adjusted in January from 575,000 in December and improved by 19.2 percent from a year ago. In the West, buffeted by volatile weather, starts declined by 41.3 percent to 225,000 units in January from 383,000 units in December and fell by 8.5 percent from a year ago. In the Northeast, starts jumped by 55.4 percent to 143,000 units in January from 92,000 in December but declined by 3.4 percent from a year ago. In the Midwest, starts fell by nearly 18 percent to 188,000 units in January from 229,000 units in December but improved by 21.3 percent from a year ago.
Despite the January decline, Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said housing starts began the year on a solid note.
“January’s decline was concentrated in the volatile multifamily sector, where apartment building is showing some signs of cooling off,” Vitner said. “January is one of the slowest months for home building each year and the reported numbers are heavily influenced by seasonal adjustment.”
Privately owned housing units authorized by building permits in January rose to a seasonally adjusted annual rate of 1.285 million, up by 4.6 percent from December’s revised 1.228 million and 8.2 percent higher than a year ago. Single-family authorizations in January fell to 808,000; authorizations of units in buildings with five units or more rose to 446,000 in January.
The report said privately owned housing completions in January fell to 1.047 million, seasonally adjusted, a 5.6 percent decline from December’s revised 1.109 million and 0.9 percent lower than a year ago. Single-family housing completions rose by 4.3 percent to 800,000; the January rate for units in buildings with five units or more fell to 244,000.
Ralph McLaughlin, chief economist with Trulia, San Francisco, agreed, saying the January drop was not “statistically significant.”
“We can’t be sure whether the actual number of starts in January was up, down or flat,” McLaughlin said.
On the other hand, McLaughlin said, the strong increase in building permits for new homes are statistically significant, “so we can be sure that homebuilders indeed hit the ground running in 2017. The big uptick in permits should be good news for inventory-constrained homebuyers, as permits eventually become starts, which in turn become new homes for sale. As a result, we shouldn’t be surprised to see a strong uptick in starts in mid-2017.”
Vitner said expectations are for modest gains in home building this year, with overall starts rising by 6.4 percent to 1.24 million, including a 10.1 percent increase in single-family starts.
