Housing Permits Hit 13-year High in January, Housing Starts Fall

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Homebuilding activity, measured by housing starts SLIPPED 3.6 percent in January after hitting the highest level in 13 years in December;
  • Single-family starts FELL 63,000, 5.9 percent in January; the SAAR for total starts FELL 59,000.
  • Housing permits meanwhile soared with the strongest month-month gain (185,000) since June 2008
  • The SAAR of all housing completions FELL 43,000 or 3.3 percent to 1.28 million while the pace of new single-family completions FELL 32,000 or 3.5 percent to 877,000.

Trends:

  • January permit filings reached their highest level since March 2007 (1.596 SAAR) The month-month increase in total housing starts was the largest since October 2016;
  • Despite the month-month decline, the SAAR of single-family starts topped 1 million for the second straight month for the first time since June-July 2007;
  • Single-family housing starts were up year-year for the eighth straight month.

 Data Source: Census Bureau and Department of Housing and Urban Development

Image result for single-family starts

After a torrid December, single-family housing starts fell 5.9 percent in January wiping out a modest gain in multi-family starts.

The slippage came one day after the National Association of Home Builders reported builder confidence and the outlook for new home sales fell.

The HUD-Census report for January was disappointing, following as it did a December which showed housing activity reaching new post-recession highs. It followed too the monthly Employment Situation report which showed residential construction jobs increasing by 21,000, the strongest monthly gain in a year. The report tracked an analysis by NAHB showing a preference for multi-family rather than single-family housing by younger buyers.

The government report also showed slippage in housing completions, with single-family completions representing nearly 75 percent of the total decline.

The Census-HUD data also appeared to support the conclusions of the NAHB report on buyer preferences. Even as total permits rose in January, permits for single-family homes represented 63.6 percent of all permits, down from 65.4 percent in December. The shift from single- to multi-family in January is part of a longer trend. Single-family permits represented 63,1 percent of all permits in 2019, down from 64,6 percent in 2017 and 2018.

Single-family starts represented 69.0 percent of all starts ion 2019, down from 69.9 percent in 2018 and 70.5 of all starts in 2017.

Hear Mark Lieberman every Friday at 6:20 am on POTUS Morning Briefing, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

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