Housing starts tumbled 16.0% in January to an annual rate of 880k, less than expectations or a smaller decline to an annual pace of 950k. The decline follows an upwardly revised drop of 4.8% in December to an annual pace of 1.048 million. The slower pace of new construction starts is typical for the season and likely related to severe winter storms in many parts of the country. Housing starts are now 2.0% below their January 2013 pace. Regionally, starts declined in the Midwest, South and West while gaining in the Northeast last month. Both single and multifamily starts declined sharply last month and are lower than their year ago levels. Single-family housing starts dropped 15.9% in January to an annual pace of 573k and are now 6.7% lower than their year ago level. Multifamily starts fell 16.3% in January to an annual pace of 307k amid substantial volatility. Housing permit issuance, which is often viewed as a proxy for future building plans, decreased 5.4% in January to an annual rate of 937k. The decline was led by a 12.1% decline in multifamily permits; single-family permits dipped 1.3% on the month. The annual pace of permit issuance remains higher than the current level of starts suggesting starts will accelerate in coming months. Also, the inventory of new homes remains historically low; this lack of supply will support new construction activity this year as homebuilders work to keep up with demand. After adjusting for seasonal variations, new construction starts are expected to strengthen once again as stronger job growth supports demand for housing.
Here is the link to our full report: Housing Starts