January housing starts blew away expectations, coming in at 1,326,000, 7.5% above the consensus of 1,234,000 and 7.3% higher than January of 2017. This is the highest level of starts since October of 2016 and reflects a strong 9.7% rebound from December, despite an upward revision of 17,000 to 1,209,000. Permits also blew away expectations, coming in at 1,396,000, 7.4% above the consensus of 1,300,000 to the highest level in more than 10 years.
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. With existing homes for sale remaining at historically low levels, there is likely enough pent up demand to offset any negative impacts of rising rates for the foreseeable future. Further, with permits at or above the 1,300,000 level for the 4th straight month, we expect housing starts to continue their strength as the spring selling season gets underway this month.
Single family starts came in at 877,000, up 3% from December’s revised number of 846,000, and 7.4% above the January 2017 number of 815,000. Multi-family starts were 431,000, 20% higher than last month and 3% higher than last year.