Housing starts fell in January, marking the first time since August that there hasn’t been month-over-month growth in residential construction.
Privately owned housing starts dropped to a seasonally adjusted rate of 1.58 million, down 6 percent from December’s revised rate of 1.68 million, according to the Census Bureau’s monthly report. December was the strongest month for residential construction since 2006.
Starts for single-family homes fared worse, with an adjusted rate of 1.16 million, down 12 percent from December’s revised rate of 1.3 million.
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January housing starts were also down 2.3 percent year-over-year; the revised rate of starts at the beginning of 2020 was 1.6 million.
The declines come as home and lumber prices are rising, potentially indicating waning demand from homebuyers who may be priced out of the market. But homebuilder sentiment ticked up in February after two months of declines, a signal that strong demand remains among prospective buyers.
On the bright side, the rate of building permits issued ticked up significantly in January, an indicator of future starts. The seasonally-adjusted rate of permits issued last month was 1.88 million, up more than 10 percent compared to the revised December rate of 1.7 million. January’s issuance is up 22 percent compared to the same time last year.
The rate of housing completions last month also slipped to a seasonally adjusted 1.3 million, about 2 percent down from December’s revised rate. The rate of single-family completions, however, jumped to more than 1 million, up 10 percent from the previous month’s revised rate of 942,000.
Overall, the housing completion rate was up 2 percent year-over-year last month, compared to January 2020, though the number of homes available to purchase remain at historically low levels.