Wednesday, February 19, 2020

Comments on January Housing Starts

by Calculated Risk on 2/19/2020 09:14:00 AM

Earlier: Housing Starts decreased to 1.567 Million Annual Rate in January

Total housing starts in January were well above expectations and revisions to prior months were positive.

The housing starts report showed starts were down 3.6% in January compared to December, and starts were up 21.4% year-over-year compared to January 2019.

These were blow out numbers!   Starts in December were at the highest level for starts since December 2006 (end of the bubble).  However, the weather was very nice again in January (just like in December), and the weather probably had a significant impact on the seasonally adjusted housing starts number. The winter months of December and January have the largest seasonal factors, so nice weather can really have an impact.

Single family starts were up 4.6% year-over-year, and multi-family starts were up 71.3% YoY.

This first graph shows the month to month comparison for total starts between 2019 (blue) and 2020 (red).

Starts Housing 2019 and 2020Click on graph for larger image.

Starts were up 21.4% in January compared to January 2019.

For the year, starts were up 3.2% compared to 2018.

Last year, in 2019, starts picked up in the 2nd half of the year, so the comparisons are easy early in the year.

Below is an update to the graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment).

These graphs use a 12 month rolling total for NSA starts and completions.

Multifamily Starts and completionsThe blue line is for multifamily starts and the red line is for multifamily completions.

The rolling 12 month total for starts (blue line) increased steadily for several years following the great recession - but turned down, and has moved sideways recently.  Completions (red line) had lagged behind - then completions caught up with starts- although starts are picking up a little again.

Single family Starts and completionsThe second graph shows single family starts and completions. It usually only takes about 6 months between starting a single family home and completion - so the lines are much closer. The blue line is for single family starts and the red line is for single family completions.

Note the relatively low level of single family starts and completions.  The "wide bottom" was what I was forecasting following the recession, and now I expect some further increases in single family starts and completions.