Housing starts have mostly been rangebound since late 2022 as high prices and high mortgage rates dampen demand.
The Monthly New Residential Construction report for January 2025 shows housing did not get off to a good start for the year.
Building Permits
- Privately-owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 1,483,000. This is 0.1 percent above the revised December rate of 1,482,000, but is 1.7 percent below the January 2024 rate of 1,508,000.
- Single-family authorizations in January were at a rate of 996,000; this is virtually unchanged from the revised December figure of 996,000.
- Authorizations of units in buildings with five units or more were at a rate of 427,000 in January.
Housing Starts
- Privately-owned housing starts in January were at a seasonally adjusted annual rate of 1,366,000. This is 9.8 percent (±12.5 percent) below the revised December estimate of 1,515,000 and is 0.7 percent (±13.0 percent) below the January 2024 rate of 1,376,000.
- Single-family housing starts in January were at a rate of 993,000; this is 8.4 percent (±10.1 percent) below the revised December figure of 1,084,000.
- The January rate for units in buildings with five units or more was 355,000.
Housing Completions
- Privately-owned housing completions in January were at a seasonally adjusted annual rate of 1,651,000. This is 7.6 percent (±8.4 percent) above the revised December estimate of 1,534,000 and is 9.8 percent (±14.0 percent) above the January 2024 rate of 1,504,000.
- Single-family housing completions in January were at a rate of 982,000; this is 7.1 percent (±8.3 percent) above the revised December rate of 917,000.
- The January rate for units in buildings with five units or more was 652,000.
Note the huge margins of error in these numbers, up to 13 percentage points in starts and 14 percentage points in completions.
Housing Starts 1959-Present
Housing starts are well below where they were in January of 1959.
Housing Starts Single Family vs Multi-Family
Single Family vs Multi-Family Details
- Since late 2022, housing starts have been rangebound between a high of 1,583,000 and a low of 1,262,000. The mid-point would be 1,423,000 while the current number is 1,366,000.
- The overall stats masks relative outperformance of single-family starts over multi-family starts.
- Single-family starts have been in a choppy uptrend since November of 2022 while multi-family starts have been in a choppy downtrend in the same period.
The current average 30-year fixed-rate mortgage is 7.03 percent according to Mortgage News Daily. This is not a favorable rate.
Permits are down to 1,483,000 from a 1,915,000 in January 2022. That’s a decline of 29 percent.
Starts are down to 1,366,000 from a 1,828,000 in March 2022. That’s a decline of 33.8 percent.
Housing will remain in the doldrums until mortgage rates or home prices are significantly lower. And that does not appear to be any time soon.
NAHB Housing Sentiment Flounders, the Market Needs Lower Mortgage Rates
Yesterday, I noted NAHB Housing Sentiment Flounders, the Market Needs Lower Mortgage Rates
Homebuilder sentiment has been low since mid-2022. Buyer traffic is dismal.
The CPI Is Deeply Flawed and the Fed Feeds those Flaws
On February 17, I noted The CPI Is Deeply Flawed and the Fed Feeds those Flaws
The Fed makes horrendous policy decisions because it does not understand inflation.
The Fed has never considered home prices to be a part of inflation stats. It wrecked the market in those beliefs.
There is no easy way for the Fed to rectify its mistakes.