Housing Starts and Building Permits Post Solid YTY Numbers In January

Feb. 26, 2010
The housing industry still has to dig out of a deep hole, but residential construction data posted by the Department of Commerce offered some reason to

The housing industry still has to dig out of a deep hole, but residential construction data posted by the Department of Commerce offered some reason to cheer.

While the January building permit data for total privately-owned housing units (621,000 permits issued) was 4.9 percent below the revised December rate of 653,000, the year-to-year numbers are 16.9 percent above the January 2009 estimate of 531,000. Single-family authorizations in January were at a rate of 507,000 — 0.4 percent above the revised December figure of 505,000, but a whopping 48.2 percent above January 2009. The National Association of Home Builders (NAHB), Washington, D.C., said the decline in total building permits was due entirely to a 23 percent decline to 114,000 units on the multi-family side, which offset a big gain in that sector the previous month.

Privately-owned housing starts in January were at a seasonally adjusted annual rate of 591,000, 2.8 percent above the revised December estimate of 575,000 and 21.1 percent above the January 2009 rate of 488,000. Single-family housing starts in January were at a rate of 484,000 — 1.5 percent above the revised December figure of 477,000 and 21.1 percent better than 2009. The January rate for units in buildings with five units or more was 100,000.

“Builders are starting to see the positive impacts of home buyer tax credits and other favorable buying conditions in terms of consumer demand, and are cautiously increasing production to meet that demand,” said Bob Jones, a home builder from Bloomfield Hills, Mich., and this year's NAHB chairman.

NAHB Chief Economist David Crowe said the favorable home buying conditions, including the availability of tax credits for first-time and repeat buyers, very favorable mortgage rates and stabilizing home values are helping drive potential buyers back to the market. However, he added that a continuing shortfall in available credit for building projects is “still producing a drag on new construction and slowing the progress of recovery in housing and the overall economy.”

NAHB said its most recent Builders/Wells Fargo Housing Market Index (HMI), also pointed toward increased builder confidence because of favorable home buying conditions and signs of healing in the job market.

“Builders are just beginning to see the anticipated effects of the home buyer tax credit on consumer demand,” said NAHB's Crowe. “Meanwhile, another source of encouragement is the improving employment market, which is key to any sustainable economic or housing recovery. That said, several limiting factors are still weighing down builder expectations, including the large number of foreclosed homes on the market, the lack of available credit for new and existing projects, and inappropriately low appraisals tied to the use of distressed properties as comps.”

New Privately Owned Housing Units Started

(Thousands of units, seasonally adjusted annual rate)

Period Total 1 Unit 5 Units or more Northeast Midwest South West January 20101 591 484 100 66 91 312 122 December 20092 575 477 85 60 94 309 112 November 20092 579 492 78 63 106 301 109 October 2009 524 471 49 54 99 265 106 September 2009 586 508 69 66 104 298 118 January 2009 488 357 118 38 58 254 138

1-Preliminary; 2-Revised; Note: Detail may not add to total because of rounding.

Source: U.S. Bureau of the Census