U.S. Housing Starts Fell Markedly in January after December Surge
by:Sandy Batten
|in:Economy in Brief
Summary
- Starts slumped 9.8% m/m in January after outsized 16.1% monthly jump in December.
- Both single-family and multi-family starts fell significantly.
- Starts declined in three of the four major regions.
- Permits were essentially unchanged in January and have been relatively flat for the past three months.
Total housing starts plummeted 9.8% m/m (-0.7% y/y) to 1.37 million units at an annual rate in January after having surged an upwardly revised 16.1% m/m in December (previously +15.8% m/m), according to data from the U.S. Census Bureau. The Action Economics Forecast Survey had expected starts to fall 7.0% m/m to 1.394 million units in January. Single-family starts declined 8.4% m/m (-1.8% y/y) in January, the first monthly decline in three months. Multi-family starts slumped 13.5% m/m (+2.2% y/y) following a downwardly revised 51.8% monthly surge in December (previously 61.5% m/m). Total starts in January were 25% below their recent peak of 1.828 million units reached in April 2022.
Starts fell in three of the four major regions in January. They plummeted 27.6% m/m (-21.1% y/y in the Northeast; declined 10.4% m/m (+30.2% y/y) in the Midwest; and fell 23.3% m/m (-9.8% y/y) in the South. By contrast and despite the wildfires that engulfed southern California, starts soared 42.3% m/m (+14.3% y/y) in the West, their first monthly gain in three months.
Building permits were essentially unchanged in January, edging up 0.1% m/m (-1.7% y/y) after a 0.7% m/m decline in December. Single-family permits were unchanged in January from December (-3.4% y/y) while multi-family permits edged up 0.2% m/m (+2.1% y/y). Permits rose in both the Midwest (+1.8% m/m) and the West (+2.3% m/m) but fell in both the Northeast (-6.1% m/m) and the South (-0.1% m/m).
Housing starts are often volatile during the winter months due largely to wide swings in the weather. By contrast, permits are much less affected by weather gyrations. Permits have barely moved over the past three months, totaling 1.49 million units in November and 1.48 million in both December and January. By contrast, starts have swung wildly, falling 2.9% m/m in November, surging 16.1% m/m in December and plummeting 9.8% m/m in January. So, it would seem that the wide swings in starts in recent months have been due more to floods, hurricanes, fire, snow, among others, than to changes in underlying fundamentals.
The housing starts and permits figures can be found in Haver’s USECON database. The expectations figure is contained in the AS1REPNA database.
Sandy Batten
AuthorMore in Author Profile »Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia. Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan. In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association. Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.
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