Housing Starts Drop To Start The Year
Privately-owned housing starts fell in January to a seasonally adjusted annual rate of 1,580,000 (Census Bureau)
– M-O-M: This is 6.0% below the revised December estimate of 1,680,000
– Y-O-Y: This is also 2.3% below the January 2020 rate of 1,617,000
The currently most popular real estate option, single-family housing, saw starts in January drop 12.2% from the December figure of 1,323,000
There is some good news for current homebuyers looking for more supply. Single-family housing completions in January were up 10% from December’s revised rate of 942,000. There is also some good news for future homebuyers as Privately-owned housing permits were up 10.4% above the revised December rate and up 22.5% when compared to January 2020.
So if finished houses and building permits are up, why are housing starts down? Simple, lumber prices. CNBC reported that Softwood lumber prices jumped a record 73% on a year-on-year basis in January, according to data from the Labor Department. There is still a strong demand for houses as is evident by the double-digit growth of building permits. However, lumber prices are putting a dent in homebuilder profits. Double-digit housing appreciation certainly helps, but if lumber prices don’t stabilize we could continue to see starts dip despite an increase in permits.