Housing starts fade 4.5% in January
Despite a recent uptick in builder confidence and last month’s surprising increase, housing starts faded again in January.
Housing starts for January 2023 fell 4.5% to a seasonally adjusted pace of 1.309 million compared to the revised December 2022 rate of 1.371 million.
The latest figure is also 21.4% below the January 2022 rate of 1.666 million, according to the latest Monthly New Residential Construction report released jointly this morning by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
Single‐family housing starts in January were at a rate of 841,000, dropping 4.3% below the revised December rate of 879,000. On a year-over-year basis, single-family starts declined 27.3%.
Last month, single-family starts jumped ahead 7.1%.
The January starts rate for buildings with five units or more decreased 5.4% to 457,000 and retreated 8.4% on a year-over-year basis.
Housing permits in January were at a seasonally adjusted annual rate of 1.339 million, dipping just 0.1% and nearly flat with the revised December rate of 1.337 million. The latest permits figure is 27.3% below the January 2022 rate of 1.841 million, however.
Single-family permits slipped 1.8% to a rate of 718,000 from the revised December rate of 731,000. But year-over-year, single-family permits plummeted 40% from a rate of 1.197 million in January 2022.
Permits for buildings with five or more units edged ahead 0.5% to a rate of 563,000 but declined 4.1% on a year-over-year basis.
"Housing construction weakened in January as ongoing affordability conditions fueled by high mortgage rates and building material costs challenged the market,” said Alicia Huey, chairman of the National Association of Home Builders (NAHB) and a custom home builder and developer from Birmingham, Ala. “And while a recent two-month upturn in builder sentiment indicates a turning point for single-family construction could take hold in the months ahead, policymakers need to fix the supply chain for building materials to ensure builders can add the additional inventory the housing market desperately needs.”
Released yesterday, the NAHB/Wells Fargo Housing Market Index (HMI) indicated an increase in home builder confidence. The HMI rose 7 points. marking the second consecutive month of increases in builder sentiment. The NAHB attributed the lift in builder confidence to easing mortgage rates.
But single-family starts are still lagging and another deceleration could be on the way.
“As completions continue to outpace construction starts, this marks the eighth straight monthly decline for the number of single-family homes under construction, which has fallen to 752,000,” said Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis. “Meanwhile, the number of apartments under construction stands at the highest level since November 1973, which means a slowdown for apartment starts is approaching.”
Here’s how housing starts and permits performed on a regional basis:
In the Northeast, total starts plummeted 42.2% as single-family starts plunged 51.6%. Combined permits decreased 7.8% as single-family permits were flat for the month.
In the Midwest, overall starts 25.9% but single-family starts saw a 7.6% increase. Total permits moved ahead 1.7% as single-family permits slipped 2.1%.
In the South, combined starts moved ahead by 7.6% while single-family stars saw an 11.6% increase. Total permits increased 3% as single-family permits fell 2.7%.
In the West, housing starts increased 5.5% but single-family starts dropped 22.5%. Total permits decreased 4.6% as single-family permits saw a slight 0.7% increase.
