January Housing Starts at Strongest Pace in Six Months

January Housing Starts at Strongest Pace in Six Months

Housing production in January rose 2.8% to a seasonally adjusted annual rate of 591,000 units, its strongest pace in six months, according to figures released by the U.S. Commerce Department on Feb. 17.

“Builders are starting to see the positive impacts of home buyer tax credits and other favorable buying conditions in terms of consumer demand, and are cautiously increasing production to meet that demand,” said NAHB Chairman Bob Jones.

“As our latest home builder surveys have indicated, today’s excellent home buying conditions — including the availability of tax credits for first-time and repeat buyers, very favorable mortgage rates and stabilizing home values — are helping drive potential buyers back to the market,” said NAHB Chief Economist David Crowe. However, he said, “A continuing shortfall in available credit for building projects is still producing a drag on new construction and slowing the progress of recovery in housing and the overall economy.”

Both single-family and multifamily starts improved in January, with the former rising 1.5% to a yearly pace of 484,000 units and the latter up 9.2%, at 107,000 units.

Meanwhile, overall permit issuance, which can be an indicator of future building activity, dipped 4.9% to a rate of 621,000 units in January, dragged down by a 23% drop in the multifamily sector to 114,000 units. Single-family permits remained virtually unchanged, rising 0.4% to 507,000 units.

Total housing starts gained ground in three out of four regions in January. Both the South and West improved for a third consecutive month, by 1% and 8.9%, respectively, and starts were up 10% in the Northeast. Starts were down 3.2% in the Midwest.

Conversely, permits declined in three out of four regions last month. They were down 17.8% in the Northeast, 20.2% in the Midwest and 1.3% in the South. Permits rose 8.5% in the West.