Residential building permits and housing starts exceed expectations

Washington, D.C. — Residential construction statistics for January 2018, announced by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, including building permits, housing starts, and housing completions, exceeded analysts’ expectations.

Building permits — Privately owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 1,396,000. This is 7.4 percent (±1.2 percent) above the revised December rate of 1,300,000 and is 7.4 percent (±1.9 percent) above the January 2017 rate of 1,300,000.

Single-family authorizations in January were at a rate of 866,000; this is 1.7 percent (±1.3 percent) below the revised December figure of 881,000. Authorizations of units in buildings with five units or more were at a rate of 479,000 in January.

Housing starts — Privately owned housing starts in January were at a seasonally adjusted annual rate of 1,326,000. This is 9.7 percent (±16.8 percent) above the revised December estimate of 1,209,000 and is 7.3 percent (±15.0 percent) above the January 2017 rate of 1,236,000.

Single-family housing starts in January were at a rate of 877,000; this is 3.7 percent (±9.7 percent) above the revised December figure of 846,000. The January rate for units in buildings with five units or more was 431,000.

Housing completions — Privately owned housing completions in January were at a seasonally adjusted annual rate of 1,166,000. This is 1.9 percent (±7.8 percent) below the revised December estimate of 1,188,000, but is 7.7 percent (±11.9 percent) above the January 2017 rate of 1,083,000.

Single-family housing completions in January were at a rate of 850,000; this is 2.2 percent (±8.3 percent) above the revised December rate of 832,000. The January rate for units in buildings with five units or more was 305,000.

“January housing starts blew away expectations, coming in at 1,326,000, 7.5 percent above the consensus of 1,234,000 and 7.3 percent higher than January of 2017,” said Scott Volling, principal with PwC. “This is the highest level of starts since October of 2016 and reflects a strong 9.7 percent rebound from December, despite an upward revision of 17,000 to 1,209,000. Permits also blew away expectations, coming in at 1,396,000, 7.4 percent above the consensus of 1,300,000 to the highest level in over 10 years.

“The surprisingly strong results for both permits and starts this month reflect the healthy demand that builders continue to see in the market, despite rising costs and affordability challenges,” Volling said. “With existing homes for sale remaining at historically low levels, there is likely enough pent up demand to offset any negative impacts of rising rates for the foreseeable future. Further, with permits at or above the 1,300,000 level for the 4th straight month, we expect housing starts to continue their strength as the spring selling season gets underway this month.”