- By David M. Kinchen
Building on significant upward revisions to numbers for the previous two months, nationwide production of new single-family homes and apartments increased 1.5 percent to a seasonally adjusted annual rate of 699,000 units in January, according to a report released Thursday, Feb. 16 by the U.S. Commerce Department. This marks the second-best pace of overall housing production since October of 2008.
“Today’s solid housing starts report indicates that builders are putting more of their crews back to work, and adds to the growing field of evidence that the overall housing market is gradually but consistently moving in the right direction,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. In addition to today’s numbers, recent builder surveys have indicated steadily increasing optimism regarding market conditions while the number of improving housing markets nationwide has grown substantially over the past six months, he noted.
“The fact that the three-month moving average for housing starts has now increased for nine consecutive months and is approaching the 700,000 mark for the first time since October of 2008 is indicative of a solid recovery in housing activity stemming from recent firming in employment and consumer confidence measures,” agreed NAHB Chief Economist David Crowe. “That said, housing production is still far from what would be considered normal in a healthy market, and many challenges remain for home builders in terms of tight credit conditions, difficult appraisals and the continued flow of foreclosed properties on the market – all of which are certainly slowing the pace of improvement in both housing and the overall economy.”
Following significant upward revisions reported for both November and December, single-family starts held virtually flat in January with a 1.0 percent decline to a 508,000-unit rate. Together with the revised December number, this is the best pace of single-family starts since April of 2010, when the home buyer tax credit was active. Meanwhile, single-family building permits, which can be an indicator of future construction activity, also held virtually unchanged, with a 0.9 percent increase in January to 445,000 units – again, the best pace since April of 2010.
The multifamily segment also continued to display greater strength in January following a 55 percent increase in starts activity in 2011 that was attributed to rising demand for rental apartments. While multifamily starts rose 8.5 percent to a seasonally adjusted annual rate of 191,000 units for the month, permits edged up 0.4 percent to 231,000 units.
The South, which is the nation’s largest regional housing market, posted the biggest gain in housing starts in January with an 18.3 percent increase, while the West and Northeast also posted significant gains of 11.9 percent and 7.9 percent, respectively. The Midwest was the exception to the rule, posting a 40.7 percent decline that partially offset a dramatic gain in the previous month.
The South also posted the largest gain in permit issuance in January, with a 10.1 percent increase. Permits also rose by 4.2 percent in the Northeast, but declined 3.7 percent in the Midwest and 18.2 percent in the West.
Other housing data from the Commerce Department report:
Privately-owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 676,000. This is 0.7 percent above the revised December rate of 671,000 and is 19.0 percent above the January 2011 estimate of 568,000.
Single-family authorizations in January were at a rate of 445,000; this is 0.9 percent above the revised December figure of 441,000. Authorizations of units in buildings with five units or more were at a rate of 208,000 in January.
Privately-owned housing completions in January were at a seasonally adjusted annual rate of 530,000. This is 12.0 percent (±8.8%) below the revised December estimate of 602,000, but is 4.1 percent above the January 2011 rate of 509,000.
Single-family housing completions in January were at a rate of 389,000; this is 14.9 percent below the revised December rate of 457,000. The January rate for units in buildings with five units or more was 136,000.