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Housing Starts Strongest Since 2016 on Multifamily

As multifamily dragged down completed construction, it was responsible for pushing up new housing permits and driving housing starts to the highest level since 2016.

Data jointly reported Friday by the Census Bureau and the Department of Housing and Urban Development indicate that permits were issued for 98,100 housing units in January.

That put last month’s seasonally adjusted annual rate of residential units that were authorized in permit-issuing places at 1.396 million.

The rate increased by more than 7 percent compared to a month earlier and a year earlier.

In the South, the seasonally adjusted annual rate of permits was 706,000, an increase over December 2017 of 22 percent — the largest of any region. The West’s 5 percent rise left the rate there at 378,000.

In the Midwest, permits were down 12 percent to an annual rate of 189,000, while the Northeast tumbled 17 percent to 123,000.

On a month-over-month basis, U.S. one-unit permits were down 2 percent. But five-unit-or-more permits jumped by a quarter.

A seasonally adjusted 158,000 housing units were authorized but not yet started as of Jan. 31, 2018.

Home builders started construction at a seasonally adjusted annual rate of 1.326 million last month —
the strongest rate since October 2016’s 1.328 million.

Last month’s starts were up 4 percent for one-unit properties and 20 percent for multifamily properties.

National Association of Home Builders Chairman Randy Noel said in a written statement that the growth was in line with NAHB’s reports of solid builder confidence.

But
LendingTree Chief Economist Tendayi Kapfidze said the increase was better than expected.

“The 3-month average of single-family starts of 893,000 is at its highest level since the financial crisis,” Kapfidze said in a written statement. “The multifamily three-month average is recovering having sunk to a four-year low in September.”

Kapfidze noted that a tight inventory is driving growth in housing starts.

A seasonally adjusted 1.120 million homes were under construction at the end of last month.

Construction was completed on 79,700 housing units during January 2018, bringing the
seasonally adjusted annual rate to 1.166 million. Although completed construction was off 2 percent from the prior month it was up 8 percent from a year prior.

At 110,000, the seasonally adjusted annual rate of completed construction in the Northeast was down from the last report by 5 percent — more than any other region. The rate dropped 4 percent in the Midwest to 169,000, and the South was off 2 percent to 589,000.

Only the West’s rate increased on a month-over-month basis — by 1 percent to 298,000.

Last month’s U.S. completed construction rate was up 2 percent on one-unit properties but down 11 percent on properties with five or more units.

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