Housing Starts Begin Year Strong
Housing starts began 2019 on a strong note, jumping by nearly 19 percent from December, HUD and the Labor Department reported Friday.
The report–delayed because of the December-January partial federal government shutdown–said privately owned housing starts in January rose to a seasonally adjusted annual rate of 1.230 million, 18.6 percent higher than the revised December estimate of 1.037 million, but 7.8 percent below a year ago. Single‐family housing starts in January jumped to 926,000; 25.1 percent higher than December’s revised 740,000. The January rate for units in buildings with five units or more rose to 289,000, up by 4 percent from December (278,000) but down by nearly 34 percent from a year ago.
Regionally, starts showed strength. In the South, starts rose by 15.5 percent, seasonally annually adjusted, in January to 700,000 units from 615,000 units in December and improved by 2.3 percent from a year ago. In the West, starts jumped by 29.3 percent to 265,000 units in January from 205,000 units in December but fell by nearly 32 percent from a year ago.
In the Northeast, starts jumped by 58.5 percent, seasonally annually adjusted, to 149,000 units in January from 94,000 units in December and improved by 28.4 percent from a year ago. Only the Midwest saw a decline, decreasing by 5.7 percent to 116,000 units in January from 123,000 units in December and fell by 20 percent from a year ago.
“The data on new housing starts has been particularly volatile over the past few months, driven by large swings in multifamily starts,” said Mortgage Bankers Association Chief Economist Mike Fratantoni. “Focusing on the single-family data, the 4.5 percent year-over-year gain is a promising sign for the housing market. Given the underlying strength in overall housing demand, slow and steady growth in new supply will support a modest increase in sales.”
Mark Fleming, chief economist with First American Financial Corp., Santa Ana, Calif., said the strong increase in housing starts reflects rising consumer sentiment and builder confidence. “Despite the headwinds, home builders are pushing through new construction projects,” he said.
The report said privately owned housing units authorized by building permits in January rose to a seasonally adjusted annual rate of 1.345 million, up by 1.4 percent from the revised December rate of 1.326 million but 1.5 percent below a year ago. Single‐family authorizations in January fell to 812,000; down by 2.1 percent from a year ago. Authorizations of units in buildings with five units or more were rose to 482,000 in January, up by nearly 5 percent from December (460,000) and up by nearly 7 percent from a year ago.
Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said residential building should continue to improve as permits run ahead of starts. “Builders may also be seeing some relief from rapidly rising material costs that were a hallmark of 2018, mostly tied to the tariff-related surge in lumber prices,” he said.
The report said privately owned housing completions in January rose to a seasonally adjusted annual rate of 1.244 million, up by 27.6 percent from the revised December estimate of 975,000 and 2.1 percent higher than a year ago. Single‐family housing completions in January jumped to 914,000, 30.2 percent higher than the revised December rate of 702,000. The January rate for units in buildings with five units or more rose to 327,000, up by nearly 25 percent from December (262,000) but down by 6 percent from a year ago.
“We estimate that over one million new households were created in 2018, adding to the demand for housing,” Fleming said. “Yet, according to January 2019 year-over-year data, only 862,000 new housing units were completed–the net number of units completed when accounting for single-family dwellings, apartments, manufactured homes and obsolescence. This leaves a shortage of over 680,000 housing units today. January’s year-over-year growth in completions will help bridge this gap between supply and demand.”
