SINGLE-FAMILY STARTS DIP IN JANUARY, WHILE PERMITS RISE

The Census Bureau and the Department of Housing and Urban Development announced privately-owned housing starts in January were at a seasonally adjusted annual rate of 1,580,000, a 6% decrease from the revised December estimate of 1,680,000 and 2.3% below the January 2020 rate of 1,617,000.

Single-family housing starts last month were at a rate of 1,162,000, or 12.2% below the revised December figure of 1,323,000. The January rate for units in buildings with five units or more was 402,000.

“Despite the pullback in single-family starts, the pace of construction continues to be strong and was similar to the pace of October and November,” says Doug Duncan, chief economist at Fannie Mae. “Single-family starts were up 15.6% from the year prior. We believe tight inventories of existing homes for sale and continued interest in suburban locations by many buyers bode well for new single-family construction going forward.”

Privately-owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 1,881,000, which is 10.4% above the revised December rate of 1,704,000 and 22.5% above the January 2020 rate of 1,536,000. Single-family authorizations in January were at a rate of 1,269,000, or 3.8% above the revised December figure of 1,223,000. Authorizations of units in buildings with five units or more were at a rate of 557,000 in January.

“Single-family permits, a leading indicator of future starts, are up nearly 30% from one year ago,” says Odeta Kushi, deputy chief economist at First American. “It's still not enough to significantly narrow the gap between supply and demand, but it's a step in the right direction.”

Privately-owned housing completions in January were at a seasonally adjusted annual rate of 1,336,000, which is 2.3% below the revised December estimate of 1,368,000 but 2.4% above the January 2020 rate of 1,305,000. Single-family housing completions were at a rate of 1,036,000, or 10% above the revised December rate of 942,000. The January rate for units in buildings with five units or more was 296,000.

“Builders still face several supply-side headwinds, including high costs for materials, such as lumber, a dearth of affordable lots, and costly regulations,” continues Kushi. “These headwinds could slow home-building momentum in the months to come, and the devastating winter storm Uri will likely result in a temporary slowdown in building in Texas.”