Winter Instability Affects Housing Starts

By Stevie Duffin Updated on 2/21/2013

By Daniel Duffield

New housing starts for private residences declined 8.5% from December to January, according to a report released by the U.S. Census Bureau and Department of Housing and Urban Development on Wednesday.

Despite this, experts at Capital Economics, while acknowledging the stoppage, state that such sluggish trends in January are not as bad as they would be during other times of the year, adding that this slow start leaves plenty of room for growth in the coming year.

Home starts in January were reported to an annual rate of 890,000 units, declining 8.5% from the December projection of 973,000. However, this figure still stands considerably above the level for January 2012, being 23.6% higher than the 720,000 recorded.

In terms of single family residences, starts hit a level of 613,000 in January, rising 0.8% from the 608,000 in December. For buildings with five or more units, starts exceeded 260,000 last month.

In addition, the number of building permits issued rose in January, reaching 925,000 and up 1.8% from December. Compared with January 2012, permits filed grew 35.2% from the 909,000 figure.

Single-family authorization in January grew 1.9% from December estimates, reaching 584,000 over the previous month’s 573,000. For multi-unit buildings of five or more, authorizations totaled 311,000 in January.

For newly constructed single-family homes, authorizations grew 1.9% to 584,000, rising from 573,000 in December.

In January, 724,000 houses were completed, rising 6% from the 683,000 completions in December and growing 33.6% from the 542,000 completions recorded a year previously.

Single-family completions rose 7% in January to a rate of 565,000, in comparison with the 528,000 from December. Multi-unit properties with five or more units reached 152,000 completions.

Analysts at Econoday indicate that housing starts show some winter sluggishness for January in this decline and may be attributable to the lasting effects of Hurricane Sandy.

The decline in housing starts was immediately preceded by a 24.1% decline in multi-family starts “after a 34.7% spike in December.”

"While weather adds to volatility in starts during winter (an outdoor activity), permits (an indoor activity) indicate that homebuilders still have some modest optimism and plan to add to supply," the analysts claimed.