Housing Starts

February 17th, 2016 10:34 am | by John Jansen |

Via FTN Financial:

Both housing starts and building permits slowed in January. Building permits fell only slightly, down 0.2% to a 1,202k annual rate. Housing starts unexpectedly fell 3.8% to a 1,099k annual rate in January, with December starts revised down slightly from 1,149k to 1,143k.

·         Housing starts fell across all four regions, led by a 12.8% decrease in the Midwest.

·         Single family starts, which make up nearly 70% of all starts, fell 3.9% to 731k.

·         Multifamily starts fell 3.7% to a 368k annual rate.

·         Permits rose in the Midwest (26.5%), West (24.5%), and South (0.3%) but fell 55.4% in the Northeast (this region has seen volatility since the middle of last year)

·         Single family permits fell 1.6% to a 720k annual rate.

·         Multifamily permits, the more volatile of the two, rose 2.1% to a 482k annual rate.

Bottom Line:

While December permits were revised down nearly 30k to a 1,204k annual rate, permit issuance, a proxy for future construction, has remained above 1200k for three consecutive months and is trending upwards, as seen in the above chart. The January housing starts slowdown is partially in response to the delayed arrival of winter weather in much of the US last month. As we have mentioned before, however, the pullback in the Midwest is likely in response to the slowing in the shale-region on the tail of continually low oil prices.  Yesterday, the NAHB Housing Market Index for February fell to 58 from an upwardly revised 61 in January. While this is the lowest since May, the pullback in homebuilder optimism is likely due to a combination of inclement winter weather coupled with recent uncertainty over the US economic outlook. The housing market is starting the year off on a softer than anticipated note, but we expect it will continue to move along the gradual upward recovery path that it has been for the last five years.

Sophia Kearney-Lederman, Economic Analyst

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