Housing starts significantly heated up in January, according to the latest report from the U.S. Dept. of Housing and Urban Development and the U.S. Dept. of Commerce.
Housing starts rose a whopping 18.6% to a seasonally adjusted annual rate of 1.23 million units, according to the report, which was delayed due to the more than month-long partial government shutdown.
“In January, the 18.6% monthly increase in housing starts reflects rising consumer sentiment and builder confidence,” First American Chief Economist Mark Fleming said. "Despite the headwinds, home builders are pushing through new construction projects.”
Single-family production rose 25.1% from last month to 926,000 units while multifamily starts came in at a seasonally adjusted annual rate of 289,000 units.
“We estimate that over one million new households were created in 2018, adding to the demand for housing,” Fleming continued. “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.”
Fleming said this leaves a shortage of over 680,000 housing units today, and January’s annual growth in completions will help bridge this gap between supply and demand.
Overall permits increased 1.4% in January to a seasonally adjusted annual rate of 1.345 million.
Single-family authorizations saw a monthly decline of 2.1% to a rate of 812,000 permits and multifamily permits were at an annualized rate of 482,000.
Lastly, housing completions in January were at a seasonally adjusted annual rate of 1.24 million, climbing 27.6% from December’s rate. Of these, single‐family housing completions were at a rate of 914,000 units and multifamily units came in at 327,000.
Navy Federal Credit Union Corporate Economist Robert Frick said the home construction industry is starting to respond to lower mortgage rates, with single-family starts and permits rebounding strongly.
“More units are the key to a housing recovery, so this report is another green shoot in possible better times for home buyers this year,” Frick continued. “We already have lowering mortgage rates and slowing home price appreciation, and now we'll be getting more units on the market, which will further moderate prices and more importantly give more Americans a better chance at homeownership."