Overall housing starts increased at a higher rate than expected, posting a 2.8 percent gain in January to a seasonally adjusted annual rate of 591,000 units, according to U.S. Commerce Department data reported in a Feb. 17 National Association of Home Builders news release.
“As our latest home builder surveys have indicated, today’s excellent home buying conditions – including the availability of tax credits for first-time and repeat buyers, very favorable mortgage rates and stabilizing home values – are helping drive potential buyers back to the market,” David Crowe, NAHB’s chief economist said in the news release. However, Crowe warned that lack of credit availability continues to hamper new construction activity.
Both single- and multi-family housing starts saw gains in January. Single-family starts increased 1.5 percent to a seasonally adjusted annual rate of 484,000 units while multi-family started increased 9.2 percent to 107,000 units. By region, overall housing starts in the Northeast, West and South increased in January, with gains of 10 percent, 8.9 percent and 1 percent, respectively. With a drop of 3.2 percent, the Midwest was the only region that recorded a decrease.
Overall permit activity fell 4.9 percent in January to 621,000 units from the previous month’s rate of 653,000 units. Multi-family permits plummeted 23 percent to 114,000 units while single-family permits inched up 0.4 percent to 507,000 units. By region, overall permit activity decline in the Northeast, Midwest and South in January, with losses of 17.8 percent, 20.2 percent and 1.3 percent, respectively. With a gain of 8.5 percent, the West was the only region that recorded an increase.
Meanwhile, homebuilder confidence increased more than expected in February, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index released Feb. 16. The index increased to 17, its highest level in three months, from the previous month’s figure of 15, the NAHB reported in a news release.
The housing market index measures builders' confidence in the market for newly built single-family homes. Scores lower than 50 indicate that more builders view sales conditions as poor than good.
“Continued low interest rates, very attractive home prices that appear to have stabilized in many markets, and the availability of the home buyer tax credit make this an opportune time for potential purchasers,” Bob Jones, NAHB’s chair, said in the news release. “As a result, builders are slightly more optimistic that the housing recovery is finally beginning to take root.”
By region, the homebuilder confidence index increased in February by two points in both the Midwest and the South to 13 and 19, respectively. However, both the Northeast and West dropped a point to 19 and 14, respectively.