US Housing Starts at Highest Level in 2 Years
Real estate, in particular housing data, is one of the most important gauges of economic health, and since the housing market collapse of 2008-2009, we've seen quite the improvement.
According to data reported on Trading Economics, American housing starts (that is the construction of new housing units, and generally the most expensive form of housing units since they are brand new) jumped 9.7% month-over-month to an annualized rate of 1,326 thousand in January 2018, right after a downward-revised 6.9% decline in December 2017. This also beat analyst expectations of a 3.4% increase. Awesomely enough, this is the highest rate of new housing builds since October of 2016.
For some historical reference, US housing starts averaged about 1,434.71 thousand from 1959 until 2018, with an all time high of 2,494 thousand in January 1972 and a record low of 478 thousand in April 2009.
Single-family starts, which is the largest segment of the market and responsible for the building of individual homes, went up 3.7% to 877 thousand and the volatile multi-family segment increased 19.7% to 431 thousand. Overall, housing starts went up in the South (9.3% to 655 thousand); the West (10.7% to 393 thousand) and the Northeast (45.5% to 128 thousand) but fell in the Midwest (-10.2% to 150 thousand).
Additionally, building permits also climbed by an impressive 7.4% to a seasonally adjusted annualized rate of 1,396 thousand: which is the highest since June 2007 and was also above market expectations of 1,300 thousand.
Multi-family home permits (i.e. apartments and condos) jumped 25.4% to 479 thousand while permits for construction of single-family homes fell 1.7% to 866 thousand. Permits increased in the South (21.9% to 706 thousand) and in the West (5.3% to 378 thousand) but shrank in the Midwest (-11.7% to 189 thousand) and the Northeast (-16.9% to 123 thousand).
Compared to the prior year, housing starts went up 7.3% and permits gained 7.4%. These are quite healthy levels, although given the fact that interest rates are likely to rise in the near future, you may see these numbers stall in the near-term.
Also important to remember that despite the most recent surge in date, the official house start numbers are really all over the place, as shown in the chart below.