Construction Spikes 18.6 Percent at Start of Year

Home-building rebounded sharply at the start of the year, spiking 18.6 percent, the Commerce Department recently reported. Combined, housing starts totaled 1.23 million, with multifamily starts at 289,000 and single-family starts at 926,000—the latter a surge of 25.1 percent. On an annual basis, construction fell short, still, down 7.8 percent from last January.

Approvals for builds resurrected, up 1.4 percent to 1.35 million permits. Approvals fell, however, in the single-family space, down 2.1 percent to 812,000. Approvals for multifamily starts totaled 482,000.

Completions jumped 27.6 percent to 1.24 million, with completions up 30.2 percent in the single-family space to 914,000. Completions in the multifamily space totaled 327,000.

“In January, the 18.6 percent monthly increase in housing starts reflects rising consumer sentiment and builder confidence,” said Mark Fleming, chief economist at First American, in a statement. “Despite the headwinds, home builders are pushing through new construction projects.

“We estimate that over one million new households were created in 2018, adding to the demand for housing,” Fleming said. “Yet, according to Jan. 2019 year-over-year data, only 862,000 new housing units were completed…This leaves a shortage of over 680,000 housing units today. January’s year-over-year growth in completions will help bridge this gap between supply and demand.”

“Some single-family projects that were on pause in December, meaning they were authorized but not started, went online in January,” said Robert Dietz, chief economist at the National Association of Home Builders (NAHB), in a statement. “However, builders remain cautious as single-family permit numbers in January were somewhat soft.”

“The bounce back in single-family starts mirrors our builder confidence surveys, as sentiment fell in the latter part of 2018 but rebounded in January after mortgage rates showed a notable decline,” said Greg Ugalde, chairman of the NAHB.

“It didn’t take long for the wounds left by December’s starts and permits data to heal,” said Matthew Speakman, economic data analyst at Zillow, in a statement.

“[These] figures were a marked improvement and a signal that builders are finally in the position to take advantage of more forgiving market conditions created by easing headwinds such as retreating mortgage rates, the stock market’s recovery and a less ambitious interest rate outlook,” Speakman said. “What’s more, January new-home sales ticked up, albeit to still historically low levels, allowing builders to offload inventory that had been piling up for much of the last year. It was a difficult end to 2018, but builders appear primed for better days ahead.”

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