Builders started work on more U.S. homes than forecast in January after an upward revision to starts in the prior month, a sign construction was on a steady path entering 2017.
Residential starts totaled an annualized 1.25 million, easing from a 1.28 million pace in the prior month, a Commerce Department report showed Thursday. The median forecast of economists surveyed by Bloomberg was 1.23 million. Permits, a proxy for future construction, increased at the fastest pace since November 2015 on a pickup in applications for apartment building.
Even with a recent pickup in mortgage costs, demand for housing is poised for growth as potential buyers benefit from increased hiring and healthier finances. At the same time, builders say a shortage of skilled workers and ready-to-build lots remain a headwind for a bigger acceleration in residential construction.
Home starts in December were revised up from a previously reported 1.23 million pace. That represented an 11.3 percent surge from the prior month and was due to a jump in multifamily unit construction. Estimates for January ranged from 1.17 million to 1.32 million, according to the Bloomberg survey of economists.
Single-family house construction increased 1.9 percent in January to an 823,000 annualized rate, the first gain in three months.
Work on multifamily homes, such as apartment buildings, fell 10.2 percent last month to an annual rate of 423,000. Data on these projects, which have led housing starts in recent years, can be volatile.
Total housing starts rose by 20 percent in the South and
55.4 percent in the Northeast, the report showed. Beginning construction in the South, the nation’s largest region, reached the highest level since August 2007. They fell 41.3 percent in the West and 17.9 percent in the Midwest.
Permits increased 4.6 percent to a 1.29 million annualized rate in January. They were projected at a 1.23 million pace, according to the survey median.
While builder optimism eased this month, it’s still close to an 11-year high on hopes that President Donald Trump will ease regulations, making it easier to purchase or build a house.
The National Association of Home Builders/Wells Fargo index of homebuilder sentiment fell to 65 in February from 67 the prior month, figures showed on Wednesday. Readings greater than 50 mean more respondents reported market conditions as good. The measures of prospective buyer traffic, current sales and the six-month outlook all showed a decrease.