Housing Starts Drop Another 4.5 Percent to a New Post-Covid Low

As expected, the Census Department's New Residential Construction report for January was another disappointment.

Building Permits

• Privately‐owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 1,339,000. 
• This is 0.1 percent above the revised December rate of 1,337,000, but is 27.3 percent below the January 2022 rate of 1,841,000. 
• Single‐family authorizations in January were at a rate of 718,000; this is 1.8 percent below the revised December figure of 731,000.
•  Authorizations of units in buildings with five units or more were at a rate of 563,000 in January.

Housing Starts

• Privately‐owned housing starts in January were at a seasonally adjusted annual rate of 1,309,000. 
• This is 4.5 percent (±15.9 percent) below the revised December estimate of 1,371,000 and is 21.4 percent (±10.6 percent) below the January 2022 rate of 1,666,000. 
• Single‐family housing starts in January were at a rate of 841,000; this is 4.3 percent (±16.4 percent) below the revised December figure of 879,000. 
• The January rate for units in buildings with five units or more was 457,000. 

Housing Completions

• Privately‐owned housing completions in January were at a seasonally adjusted annual rate of 1,406,000. 
• This is 1.0 percent (±9.8 percent) above the revised December estimate of 1,392,000 and is 12.8 percent (±13.0 percent) above the January 2022 rate of 1,247,000. 
• Single‐family housing completions in January were at a rate of 1,040,000; this is 4.4 percent (±10.4 percent) above the revised December rate of 996,000. 
• The January rate for units in buildings with five units or more was 349,000. 

Housing Starts Single Family vs Multi-Family 

Single vs multi-family starts, yellow highlights current, red a year ago, green pre-covid pandemic

Chart Notes

• A year ago, seasonally-adjusted annualized single-family starts were 1.157 million.
• Pre-pandemic they were 1.038 million. 
• In January of 2023 they were 841,000.

Unadjusted Numbers

Unadjusted Starts, Permits, Completions, Chart by Mish

Unadjusted Notes

• On an unadjusted basis vs a year ago, permits fell from 132,000 to 101,000.
• On an unadjusted basis vs a year ago, starts fell from 121,000 to 96,000.
• On an unadjusted basis vs a year ago, completions rose from 87,000 to 96,000.

There will be huge price pressures and discounts on any builder-owned units.

Expect More Negative Revisions

Last month I commented "Housing starts and permits declined again in December with negative revisions to November."

This month, the Census department revised December starts from 1.382 million at a  seasonally-adjusted annualized rate (SAAR), to 1.371 million.

Discounting the revision, starts fell 5.3 percent. 

The Bloomberg Econoday consensus was 1.365 million starts, missing the mark badly.

Heading into and at the start of recessions, revisions are negative. Coming out of recession revisions are positive.

Expect more negative revisions in housing, GDP, retail sales, and jobs. 

Industrial Production Much Weaker Than Expected, With Negative Revisions Too

Yesterday, I noted Industrial production was flat in January vs an expected 0.5 percent gain. 

Negative numbers make the miss worse than it looks although manufacturing did rebound.

For discussion, please see Industrial Production Much Weaker Than Expected, With Negative Revisions Too

Also note that Consumers Go on Huge Retail Sales Shopping Spree in January After Months of Weakness

Don't expect much if any follow-up to that. Negative revisions are likely.

https://mishtalk.com/economics/housing-starts-drop-another-4-5-percent-to-a-new-post-covid-low