WASHINGTON, Feb 17: Construction begun on new housing fell slightly in January, driven by sharp declines in building in the US West and Midwest, the Commerce Department reported on Thursday (Feb 16).
The slowdown last month was magnified by an upward revision to December’s already strong construction pace.
But a second consecutive increase in permits for new home building indicates construction is poised to rebound.
Housing starts fell 2.6 per cent in January to an annual rate of 1.25 million units, with construction in the western United States plunging 41.3 per cent and in the Midwest falling 17.9 per cent.
Analysts were expecting a bigger slowdown to 1.22 million units.
Compared to January 2016, however, the upward trend persisted, with building up 10.5 per cent.
Construction started on single-family homes rose nearly two per cent in the month, while buildings with multiple units dropped eight percent, continuing the recent trend of month-to-month swings
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the recent trend for single-family units had been upwards for permits and starts, but he wondered if it was sustainable.
“We are curious to see if this can last, given that homebuilders’ sentiment has already given up two-thirds of the gain reported immediately after the election, with buyer traffic back down at its October level,” he wrote in a client note. “For now, though the core numbers look robust.”
The trend in housing construction has been more towards apartment buildings for rentals, as younger people hold off on buying property, and the pace is up 26 per cent from a year ago, while building of single-family homes is up just six percent.
Building permits posted their second consecutive month of gains, rising 4.6 per cent in January on the back of a 23.5 per cent rise in authorizations for buildings with five or more units.