Housing Starts And Permits Softer Than Expected

Housing starts and permits proved softer-than-expected in January, down 3.8 percent to an annual rate of 1.099 million for starts with permits down 0.2 percent to 1.202 million. Starts show roughly equal weakness between single-family homes, down 3.9 percent to a 731,000 rate, and multi-family homes, down 3.7 percent to 368,000. Permits for single-family homes fell 1.6 percent to 720,000 while multi-family permits, in the strongest reading of the report, rose 2.1 percent to 482,000.

Multi-family homes remain the center of strength for the housing sector with year-on-year permits up 19.9 percent, surpassing a very solid 9.6 percent gain for single-family homes. Starts are lagging far behind, at a year-on-year plus 1.8 percent overall and reflecting supply constraints in the construction sector, including for labor, as well as January's heavy weather that hit the East Coast at mid-month.

The housing sector isn't on fire but trends in permits do point to strength. Watch for existing home sales on Tuesday next week followed by new home sales on Wednesday.

Recent History Of This Indicator:
Housing starts & permits have been volatile month-to-month but have been trending higher with accelerating strength. Forecasters see starts coming in at a 1.175 million annual rate in January, in what would be a 2.3 percent gain from November, with permits far out front at 1.224 million in what would, however, be a fractional decline on the month. Starts and permits both fell back in December but followed strong gains in November. Year-on-year, starts were up a healthy 6.4 percent in December with permits especially strong at 14.4 percent.