Housing starts, building permits and completed construction all saw increases of over 9%, according to the latest new residential construction data from the U.S. Census Bureau.
The rise in housing starts breaks the previous five-month streak of decreases, from September to January. However, the single-family market remains much slower as builders continue to experience struggles with high mortgage rates, high construction costs and recent turmoil in the banking system.
Housing starts in January were at a seasonally adjusted annual rate of 1,450,000, 9.8% above the January rate of 1,309,000, but 18.4% below last year’s rate of 1,777,000. Single‐family housing starts also saw a slight increase of 1.1%, from 821,000 in January to 830,000, but still 31.6% lower than a year ago. In addition, multifamily starts increased by 24% to 620,000. The rate for units in buildings with five units or more was 608,000, an increase from last month’s rate of 457,000.
On a regional basis, combined single-family and multifamily starts were 16.5% lower in the Northeast, 70.3% higher in the Midwest, 2.2% higher in the South and 16.8% higher in the West.
“Despite persistent supply-side challenges, rising builder confidence is signaling a turning point for home building later in 2023,” said Robert Dietz, chief economist of the National Association of Home Builders. “Starts were up in February given a limited pullback for interest rates. We expect volatility in the months ahead as ongoing challenges related to construction material costs and availability continue to act as headwinds on the housing sector. However, interest rates are expected to stabilize and move lower in the coming months, and this should lead to a sustained rebound for single-family starts in the latter part of 2023.”
Building permits in January were at a seasonally adjusted annual rate of 1,524,000, 13.8% above January’s rate of 1,339,000, but 17.9% below last year’s rate of 1,857,000. Single-family permits also saw an increase of 7.6%, from 722,000 in January to 777,000. On trend, multifamily permits increased 21.1% to a rate of 747,000. The rate for units in buildings with five units or more increased from 563,000 in January to 700,000.
Regionally, permits were 2.8% lower in the Northeast, 9.6% higher in the Midwest, 10.9% higher in the South and 30% higher in the West.
Completed construction was at a seasonally adjusted annual rate of 1,557,000, 12.2% above the January rate of 1,388,000 and 12.8% above last year’s rate of 1,380,000. Single-family completed construction increased slightly, only 1%, from 1,027,000 in January to 1,037,000. The rate for units in buildings with five units or more was 509,000, well above last month’s rate of 349,000.
“Builders continue to grapple with increased market uncertainty due to ongoing building material supply bottlenecks, volatile mortgage rates and increased jitters in the banking sector,” said NAHB Chairman Alicia Huey. “At the same time, builder sentiment has been edging higher in the early part of 2023 as a significant amount of housing demand exists on the sidelines and resale inventory is limited.”
For the full report, click here.
