Due of high interest rates, US housing starts fell to 1.309 million units, a 4.5% month over month decrease in January on a seasonally adjusted annual basis.
This is the fifth consecutive month in which housing starts have decreased, the longest streak since 2009. Reuters polled economists who predicted 1.36 million new housing starts annually, but the number came in below expectations.
In January, both single-family and multifamily building were down. Single-family dropped 4.3% from December and multifamily down by 4.9%. With total housing starts declining 21.4%, both single-family (fell 27.3%) and multifamily (fell 8.1%) have declined substantially year over year.
The number of single-family home starts fell to 841,000 units in August, a seasonally adjusted annual rate, affected by both input and labor prices and availability. First American Financial Corp.’s deputy chief economist Odeta Kushi noted that single-family homes under construction also lag.
National Association of Home Builders chair Alicia Huey spoke out in favor of legislative measures that are designed to ease supply chain bottlenecks. As COVID-19 began to put additional strain on the availability of construction materials, her predecessors have called for the same action.
Kushi noted that completions of single-family homes increased by 4.4% this month and are up by 12% over the past year. In the months ahead, the number of single-family homes under construction is likely to decline some due to the outperformance of single-family completions over housing starts since July 2022.
High interest rates continue to hamper demand, so Kushi expects builders to prioritize backlogs over new constructions. She explained that rather than starting new projects, builders will likely focus on finishing existing ones. The rise in new completed inventories will give a supply-starved market some much-needed relief.