Housing Starts Fall in January, But It Probably Doesn’t Mean Much as Permits Shot Higher

It’s the middle of winter when the weather plays a big role in construction, and creates a low season for building and buying anyway, which means we can probably take last month’s housing starts numbers with a grain of salt.

Still, U.S. homebuilding fell more than expected in January amid soaring lumber prices, though a surge in permits for future construction suggested the housing market remains supported by lean inventories and historically low mortgage rates.

Housing starts decreased 6.0% to a seasonally adjusted annual rate of 1.580 million units last month, the Commerce Department said on Thursday, well below the consensus forecast of 1.658 million units in January.

Homebuilding fell 2.3% on a year-on-year basis.

Softwood lumber prices jumped a record 73% on a year-on-year basis in January, according to data from the Labor Department. Still, the housing market remains supported by historically low mortgage rates and lean inventories of previously owned homes.

Permits for future home building shot up 10.4% to a rate of 1.881 million units in January. Permits typically lead starts by one to two months, so we can expect a pretty good rebound in the spring.

Single-family homebuilding, the largest share of the housing market, tumbled 12.2% to a seasonally adjusted annual rate of 1.162 million units. Single-family starts had increased for eight straight months. Single-family building permits rose 3.8% to a rate of 1.269 million units in January.

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