In January, the US housing market saw a decline in single-family home construction, yet with improving mortgage rates and rising homebuilder confidence, signs of stabilization emerge amidst the recession’s impact on the housing market. The Commerce Department’s report reveals a 4.3% decrease in single-family housing starts, with a significant 27.3% drop compared to the previous year, signaling ongoing challenges in the industry. Despite these trends, there’s a notable shift in construction activity across different regions, indicating varying market dynamics and demands.
In January, there was a decrease in the construction of single-family homes in the United States. However, with mortgage rates becoming more favorable and homebuilder confidence on the rise, there are signs that the US housing market, impacted by the recession, may be stabilizing.
According to the Commerce Department’s report on Thursday, the rate of single-family housing starts, which represent the majority of home construction activity, declined by 4.3% to reach 841,000 units annually, when adjusted for seasonal variations. Additionally, there was a significant decrease of 27.3% compared to January of the previous year in single-family homebuilding activity.
In the previous month, there was a sharp decline in single-family home construction in the Northeast and West regions, possibly exacerbated in the latter due to flooding in California. Conversely, there was an increase in construction starts in the densely populated South and Midwest areas.
The US housing market has been negatively impacted by higher mortgage rates, leading to a recession. Despite this, there are indications that the housing market downturn may be reaching its lowest point. The sector has been heavily affected by the Federal Reserve’s aggressive campaign of interest rate hikes.
US housing projects comprising five units or more experienced a 5.4% decrease in starts, reaching a rate of 457,000 units. Demand for rental accommodation continues to support multi-family housing construction.
With both single-family and multi-family home construction seeing declines, overall housing starts experienced a 4.5% drop to a rate of 1.309 million units last month. This marks the lowest level since June 2020. Economists surveyed by Reuters had predicted a decrease to a rate of 1.360 million units in December. Year-on-year, starts declined by 21.4%.
Single-family building permits saw a decline of 1.8%, reaching a rate of 718,000 units, whereas permits for housing projects with five units or more increased by 0.5%, reaching a rate of 563,000 units. Overall, building permits experienced a slight increase of 0.1%, totaling a rate of 1.339 million units.
The number of approved houses awaiting construction grew by 0.7% to 291,000 units. Although there was a 4.3% decrease in the backlog of single-family homebuilding, amounting to 132,000 units, the completion rate for this segment saw a rise of 4.4%, reaching a rate of 1.040 million units.
Source: Fordaq.com
