Housing starts tumble in January
Privately-owned housing starts declined in January, particularly in the single-family homes segment.
Total housing starts fell 6% to a seasonally adjusted annual rate of 1.58 million from the revised December 2020 estimate of 1.68 million, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported this morning.
The latest Monthly New Residential Construction report also shows that housing starts for January are 2.3% below the January 2020 rate of 1.617 million.
Single-family starts in January were at a rate of 1.162 million, which is 12.2% below the revised December 2020 rate of 1.323 million.
Multifamily starts, including apartments and condos, increased 17.1% to a 418,000 pace.
“Concerns over higher lumber prices produced softness for the housing market amid solid buyer traffic at the start of the year,” said NAHB Chairman Chuck Fowke. “With the cost of building materials rising at a rapid pace, the challenge for builders is to keep home prices at an affordable level for buyers even as the regulatory policy environment may become more challenging.”
“The weakness in housing starts in January is consistent with our recent builder surveys,” said NAHB Chief Economist Robert Dietz. “Builders report concerns over increasing lumber and other construction costs and delays in obtaining building materials. Rising interest rates will also erode housing affordability in 2021, as existing home inventories remain low."
January permits fell 10.4% to a seasonally adjusted annual rate of 1.881 million from the revised December rate of 1.704 million. Compared to the January 2020 rate of 1.536 million, permits plummeted 22.5% last month.
Single-family permits in January climbed 3.8% to a rate of 1.269 million from the revised December rate of 1.223 million.
Dietz notes that that the number of single-family homes permitted but not started construction jumped to 114,000 units in January. This is 9.6% higher than December and 28.1% higher than a year ago, as building material cost increases and delays slow some home building.
Here’s how housing starts and permits break down by region:
- In the Northeast, total starts increased 2.3% as single family starts climbed 2.2% compared to December 2020. Total permits jumped 39.3% as single-family permits increased 12.5%.
- In the Midwest, total starts declined 12.3% while single-family starts dropped 24.4%. Total permits edged up by 0.8% as single-family starts climbed 4.1%.
- In the South, total starts slipped 2.5% while single-family starts dropped 8.8%. Total permits increased 8.3% as single-family permits grew by 1.4%.
- In the West, total starts slumped 11.4% with single-family starts falling 14.9%. Total permits ascended 11.7% with single-family permits rising 7.2%.
The complete Monthly New Residential Construction report for January 2021 is available here.