US Single-Family Housing Starts Decline in January

In January, U.S. single-family homebuilding experienced a decline, likely due to severe weather conditions. However, an increase in permits for future construction suggests a potential rebound in the coming months.

The Commerce Department’s Census Bureau reported that single-family housing starts, a key indicator of homebuilding activity, dropped by 4.7% to a seasonally adjusted annual rate of 1.004 million units in January. This decline followed a revision of December’s data, which showed single-family starts falling to a rate of 1.054 million units instead of the previously reported 1.027 million units.

The harsh weather conditions experienced across much of the country in January likely contributed to the decline, making it challenging to initiate new construction projects. These below-normal temperatures also impacted retail sales and manufacturing production for the month.

Despite this decline, the housing market continues to be supported by a shortage of previously owned houses available for sale.

In January, single-family homebuilding decreased in the Midwest, the densely populated South, and the West, while it saw an increase in the Northeast.

A rebound is anticipated as temperatures rose in February and the Federal Reserve is expected to begin cutting interest rates in the first half of the year. The National Association of Home Builders’ survey indicated that confidence among single-family builders reached an 18-month high in February, with fewer builders reporting price cuts and a reduction in the use of sales incentives.

Permits for future construction of single-family homes increased by 1.6% to a pace of 1.015 million units in January. Conversely, starts for housing projects with five units or more experienced a significant decline of 35.8% to a rate of 314,000 units.

Overall housing starts fell by 14.8% to a rate of 1.331 million units in January, contrary to economists’ expectations of no change at a rate of 1.460 million units. Multi-family building permits also dropped by 9.0% to a rate of 405,000 units last month, while building permits as a whole slipped by 1.5% to a rate of 1.470 million units.