Residential starts slipped 3.6 per cent to a 1.57 million annualized rate, still the second-fastest pace of the expansion, after an upwardly revised 1.63 million pace in the prior month, according to government figures released Wednesday. January starts exceeded the median estimate in a Bloomberg survey of economists. Permits, a proxy for future construction, advanced 9.2 per cent to a 1.55 million rate, the highest since March 2007.

Key Insights

  • While the pace of construction eased in January, the figures suggest the housing market remains a bright spot for the U.S. economy amid sluggish business investment. When paired with continued strength in housing permits, current and planned construction should help mitigate a lean supply of housing.
  • Mild weather likely played a role in both the December and January readings as warmer temperatures supported construction in months that typically slow homebuilding in areas like the Northeast.
  • Single-family starts declined 5.9 per cent to a 1.01 million pace, though permits climbed to a 987,000 rate that was also the highest since 2007.
  • Starts of multifamily homes, a category that tends to be volatile and includes apartment buildings and condominiums, edged up 0.7 per cent, after spiking 25.4 per cent in December. Permits surged 14.6 per cent to a 564,000 pace.
  • Private data released Tuesday showed sentiment among homebuilders eased slightly in February, but held near a two- decade high, as gauges of sales and prospective buyer traffic cooled. Recent figures from the University of Michigan showed home-buying attitudes in February advanced to the highest level since 2017.

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  • By region, new-home construction fell in the South and Midwest. Starts increased in the Northeast to the highest since June 2015 and climbed in the West the best level since the end of 2006.
  • The report, produced jointly by the U.S. Census Bureau and the Department of Housing and Urban Development, has a wide margin of error, with a 90 per cent chance that the headline figure was between a 16.9 per cent drop and a 9.7 per cent increase.

--With assistance from Chris Middleton.