New home construction started the new year with a bang. Housing starts jumped almost 10% in January, and experts believe this increase in new construction could provide much-needed relief to a housing inventory that still sits at record lows.
- Privately-owned housing started increased 9.7% month-over-month to 1.33 million in January
- Multifamily housing starts showed exceptional growth; single-family starts showed modest growth
- Building permits authorized for multifamily units jumped more than 7%; permits for single-family units decreased 1.7%
“Terrific news on housing starts in January with a solid 10% gain,” said Lawrence Yun, National Association of Realtors chief economist. “This rise in single-family housing construction will help tame home price growth, and the increase in multifamily units should continue to help slow rent growth.”
“The large gain in housing starts in the West, 10.7%, is especially welcomed, as that region has been facing acute housing shortages,” Yun said. “Ultimately, there is still large room for improvement given the fact overall housing inventory is currently near historic lows.”
But it is still unclear if this strong pace will continue. Privately owned housing units authorized by building permits increased a full 7.4% from December’s 1.3 million to 1.4 million in January. This is also up 7.4% from 1.3 million in January 2017.
However, this increase was led by permits authorized for multifamily units. Single-family authorizations decreased 1.7% to 866,000 in January, down from 881,000 in December.
“For all of 2018, we project total housing starts to rise by nearly 10% to around 1.3 million units, the highest level of starts since 2007,” Nationwide Chief Economist David Berson said.
Another expert agreed demand for new homes, and therefore new home construction, doesn’t look as though it will let up anytime soon.
“The surprisingly strong results for both permits and starts this month reflect the healthy demand that builders continue to see in the market, despite rising costs and affordability challenges,” PwC Principal Scott Volling said.
View the original article at Housing Wire