January Housing Starts Show Promise Despite Slight Slowdown

Housing starts cooled slightly in January compared to the commendable effort in the close of 2019. But that should not worry builders too much: Despite the 3.6 percent drop from December, they were up a whopping 21.4 percent from January 2019. This is just another sign that the housing industry is ready to continue the strong performance that it started heading into the new year. And as added evidence, January housing permits rose 9.2 percent from December, which is just under an 18 percent increase from the year prior. 

Builders’ exceptionally strong finishing kick during the closing months of 2019 gave the housing market a ton of momentum heading into 2020 – momentum unlikely to be meaningfully dented by the small monthly pullback in housing starts seen in January’s building data. Permits and starts were both well above year-ago levels and gains were widespread across all major regions. Taken altogether, the past few months represent easily the best sustained performance by builders since well before the Great Recession, and there’s currently little reason to suspect this can’t continue. Homebuilder confidence slipped modestly in January, but remains near multi-year highs and solidly in positive territory. An ongoing and increasingly severe inventory shortage means buyers are starving for new supply of any kind, including the often higher-priced offerings delivered by home builders.

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