Housing starts reach highest level in more than a year
New-home construction rose in January to the highest level since October 2016, helped by a surge in apartment building, as momentum in the housing market continues into 2018, government figures showed Friday.
Residential starts rose 9.7% to a 1.33 million annualized rate (the estimate was 1.23 million) after a revised 1.21 million pace in the prior month. Multifamily home starts jumped 23.7% and single-family rose 3.7%. Permits, a proxy for future construction of all types of homes, climbed 7.4% to 1.4 million (the estimate was 1.3 million), the highest since June 2007.
The results are a positive sign that homebuilding will continue its advance after the best year for new construction in a decade. Demand is expected to be supported by steady hiring and elevated confidence to make big purchases.
The only region to suffer a setback in beginning construction last month was the Midwest, which was impacted by severe winter weather.
In an indication that builders will be busy in coming months, 158,000 homes were authorized but not yet started in January. That was the most since June 2008. The number of homes currently under construction reached the highest level since August 2007.
A gauge of homebuilders' confidence is near the highest level since 1999, indicating developers expect a good year. Nonetheless, the industry faces hurdles that include a recent spike in mortgage rates, a shortage of workers, rising costs for materials and a scarcity of ready-to-build lots.
Single-family home starts rose to an 877,000 rate from 846,000 the prior month. Groundbreaking on multifamily homes, two or more units such as apartment buildings and condominiums, surged to an annual rate of 449,000; data on these projects can be volatile. Starts in the West increased 10.7% to 393,000, the highest since December 2006; construction in the South rose 9.3% to 655,000.
Building permits in the South and West advanced to the highest levels since 2007. The report shows a wide margin of error, with a 90% chance that the January figure was between a 7.1% drop and a 26.5% gain. The report was released jointly by the Census Bureau and Department of Housing and Urban Development.