Housing Starts

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses housing starts.
  • In a mild disappointment, Census reported 890,000 starts in December, an increase of 23.6% from a year earlier, but an 8.5% decline from an upwardly revised December figure.
  • Starts are important as construction is highly correlated with job creation and directly impacts housing supply.
  • Single family construction, which has lagged for several years in the wake of the subprime crisis and subsequent bloat in inventory, managed to defy the headline decline in starts with a modest 0.8% increase from December figure and is 20% higher than a year ago.
  • Permits for construction of single family units rose 1.9% from December to January and are 29.2% higher than a year earlier.
  • While housing starts are strong, they remain well below the historic average and should not pose a threat to inventories as much of the building is done in niche markets and inventories have fallen sharply in recent quarters.  Builder and lender confidence in local conditions is a positive indicator for inventories, sales volumes, and price trends in these markets.
  • Furthermore, new construction and the economic multiplier that it generates will help to spur further job creation and income growth.

Ken Fears, Director, Regional Economics and Housing Finance

Ken Fears is the Manager of Regional Economics and Housing Finance Policy. He focuses on regional and local market trends found in the Local Market Reports and the Market Watch Reports . He also writes on developments in the mortgage industry and foreclosures.

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