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First Cut: Housing starts bounce back in January, permits remain on trend

Starts of new homes bounced back in January with a 18.6% rise to 1.230 million units (SAAR) after 1.037 million units in December. Even better, the gain was concentrated in single-family units which rose 25.1% to 926,000, its highest since 938,000 in May 2018. Multi-unit starts had a modest increase of 2.4% to 304,000 in January. Nonetheless, starts were down 7.8% from January 2018 when mild weather allowed more outdoor construction.

Starts were uneven across regions with the Northeast seeing a burst of new activity (+58.5%), the West starting to recover from the wildfires (+29.3%), the South getting ready for the spring buying season (+13.8%), but the Midwest hampered by severe cold weather (-5.7%).

Permits-issued remained about on trend with a mild 1.4% increase to 1.345 million units (SAAR) in January, little changed from the prior two months. Permits were off 1.5% from January 2018. Permits were down 2.1% for single-family units in January from December and the lowest since 803,000 in August 2017. It was down 6.7% from the year-ago month. The more volatile multi-unit sector was up 7.2% from the prior month and up 7.5% from January 2018. At present, consumers may be opting for smaller homes as their buy-in to the housing market.

In any case, lower mortgage interest rates probably helped both builders and buyers look more favorably on construction and purchase of new homes.


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