January 2000 total housing starts were at a seasonally-adjusted annualized level of 1.775 million units, the best monthly level recorded since January 1999. January activity improved 1.5% from the seasonally adjusted pace of December 1999 new construction, and was only 1.6% lower than the extraordinary 1.8- million unit level reached during the first month of 1999. This hardly provides evidence for the widely held perception that higher mortgage interest rates have moved the housing market to a lower level of activity.
Single-family homes were started at an annualized rate of 1.396 million in January 2000 - 2.1% lower than during December of 1999 but 0.2% above the pace of a year earlier. Multifamily units were started at an annualized rate of 379,000 during this January, much improved over the 322,000 unit pace of the month before, but almost 8% lower than during the first month of 1999.
Revised numbers for the full year of 1999 show total starts reaching a level of 1.665 million units, for an increase of 3.0% from the already-healthy 1998 total. The number of single-family homes started during 1999 was estimated at slightly more than 1.33 million units, a total 4.9% above the 1998 level. However, an estimated 4.1% fewer units were started in multifamily buildings during 1999 than in the previous year.
Regionally, the Midwest recorded a 7.9% increase in total starts during 1999. The Northeast (+3.4%) and the South (+2.5%) saw starts increase at modest rates more in line with the national average. However, starts in the West (Rocky Mountain and Pacific Coast states) were estimated to have declined by a slight 1,700 units (or 0.4% of the 1998 total) last year.
Residential building permits nationwide were issued at a seasonally-adjusted annual rate of 1.763 million units during January 2000. This was sharply higher (+8.7%) than the December 1999 level, but marginally below the number of permits issued during the first month of last year.
Between December of last year and the first month of 2000, the annualized pace of permit issuance rose in all regions of the country, with the Midwest and Northeast leading the way in percentage growth and the South recording the most modest improvement. However, both the South and West regions of the country (the two largest in terms of total units started in any given year) let fewer permits for new residential construction this January than during January 1999, so overall starts are likely to fall short of 1999’s near-record total during this year.