The Commerce Department released a report on Thursday showing new residential construction in the U.S. pulled back sharply in the month of January.
The report said housing starts tumbled by 4.1 percent to an annual rate of 1.638 million in January after inching up by 0.3 percent to a revised rate of 1.708 million in December.
Economists had expected housing starts to edge down by 0.1 percent to a rate of 1.700 million from the 1.702 million originally reported for the previous month.
The much bigger than expected decrease came after housing starts reached their highest annual rate since last March in December.
Single-family housing starts led the way lower, plunging by 5.6 percent to a rate of 1.116 million, while multi-family starts slid by 0.8 percent to a rate of 522,000.
Meanwhile, the report said building permits climbed by 0.7 percent to an annual rate of 1.899 million in January after spiking by 9.8 percent to a revised rate of 1.885 million in December.
Building permits, an indicator of future housing demand, had been expected to plummet by 6.0 percent to a rate of 1.760 million from the 1.873 million originally reported for the previous month.
With the unexpected increase, building permits reached their highest annual rate since hitting 1.905 million in May of 2006.
Single-family permits spiked by 6.8 percent to a rate of 1.205 million, more than offsetting an 8.3 percent nosedive in multi-family permits to a rate of 694,000.
“We expect housing starts to average about 1.61 million in 2022, but the January permits data suggest an upside risk to the forecast, at least early in the year,” said Nancy Vanden Houten, Lead Economist at Oxford Economics.
She added, “Strong demand, sparse inventory, relatively upbeat homebuilder sentiment and a large backlog of starts should support new home construction this year.”
The Commerce Department noted the annual rates of housing starts and building permits were both up by 0.8 percent compared to the same month a year ago.
On Wednesday, the National Association of Home Builders released a separate report showing homebuilder confidence in the U.S. has unexpectedly edged lower in the month of February.
The report showed the NAHB/Wells Fargo Housing Market Index slipped to 82 in February from 83 in January, while economists had expected the index to come in unchanged.
The NAHB said the unexpected dip in homebuilder confidence came as ongoing building material production bottlenecks are raising construction costs and delaying projects
Source: Read Full Article