A Happy New Year for Construction Stats

Residential construction got off to a strong start in January, with sizable increases in both permits and housing starts and only a slight downturn in completions. The gains follow a particularly disappointing performance in construction starts in December.  Statistics were spotty on a regional basis, and especially weak in the Midwest.

The Census Bureau and the Department of Housing and Urban Development said residential construction permits were at an annual rate of 1,396,000 units, a 7.4 percent increase over both December and January 2017.   The annual rate clock in both earlier periods was 1,300,000.  The December number was a slight revision from the 1,302,000 originally reported. Permitting exceeded even the highest forecasts. Analysts estimates reported by Econoday ranged from 1,260,000 to 1,320,000. The consensus was 1,300,000.  Permits for single family construction slipped to a rate of 866,000, down 1.7 percent from the December rate of 881,000 but 7.4 percent above the pace of a year earlier. Multi-family permitting rose 25.4 percent from the previous month's level and was 3.0 percent above the January 2017 rate.  Permits were issued at a 479,000-unit pace.  On a non-adjusted basis there were 98,100 permits issued during the month compared to 93,100 in December and 87,300 in the prior January. Single family permits totaled 61,100 compared to 56,500 in December.

Privately owned housing starts were at a seasonally adjusted annual rate of 1,326,000, a 9.7 percent increase from December. The original December estimate of 1,192,000 was revised to 1,209,000. January starts were 7.3 percent higher than the January 2017 rate.  Starts also outpaced expectations which ranged from 1,210,000 to 1,305,000. The consensus of those polled by Econoday was 1,232,000 units. Single-family housing units were started at a rate of 877,000, a 3.7 percent month-over-month gain and 7.6 percent higher than the previous January.  The December estimate of 836,000 single-family construction starts was revised to 846,000. Multifamily starts were up an estimated 19.7 percent from December at an annual rate of 431,000 units. This was an annual increase of 3.1 percent.

On an unadjusted basis, construction was begun on 90,100 residential units during the month.  Fifty-eight thousand were single family units.  The respective numbers in December were 81,300 and 55,100.

Completions fell slightly from the revised December estimate of 1,188,000 annual units to 1,166,000, a decline of 1.9 percent.  They were 7.7 percent higher than a year earlier. The December estimate was a revision from the 1,177,000 originally reported.  Single family units were completed at an 850,000 annual rate, up 2.2 percent from 832,000 in December.  Multifamily completions fell by 11.1 percent from the previous month but were 10.1 percent ahead of last year.  On an unadjusted basis there were 79,700 residential units completed in January, down from 113,300 the prior month. Single family completions dropped from 82,200 to 58,300.

At the end of the reporting period there were 1,120,000 residential units under construction, 499,000 of which were single-family units.  A total of 158,000 permits had been issued for which construction hadn't yet started. Eight-eight thousand were for single family houses.

Permits in the Northeast dropped by 16.9 percent from the December level and were 19.6 percent lower than in January 2017. Housing starts rose by 45.5 percent and were 2.4 percent above the previous year's rate. Completions were down 5.2 percent for the month but running 31.0 percent ahead of the prior January.

In the Midwest permitting fell 11.7 percent month-over-month and 4.5 percent on an annual basis. Starts dropped 10.2 percent and 25.7 percent for the respective earlier periods. Completions were also down, by 4.0 percent and 2.9 percent.

Much of the national increase in permitting occurred in the South. It picked up there by 21.9 percent compared to December and rose 8.1 percent on an annual basis. Starts were up by 9.3 percent for the month but declined 3.4 percent from the previous January.  Completions eased back by 1.8 percent and 3.6 percent respectively.

Permits in the West were issued at a rate 5.3 percent higher than the previous month and up 27.7 percent from a year earlier.  Starts were 10.7 percent above the December rate and rose 70.1 percent year-over-year. There were 0.7 percent more completions than in December and a gain of 39.3 percent compared to a year earlier.