U.S. housing starts fell for single-family projects off a 6-1/2-year high in January as ground breaking declined 2.0 percent. The Commerce Department said on Wednesday starts fell to a seasonally adjusted annual pace of 1.07 million units, while Decembers’ starts were barely revised at a 1.09 million-unit pace and January’s reading was in line with Wall Street’s expectations.
Housing starts have now been above the one million-unit mark for five straight months, and compared to January last year, groundbreaking was up 18.7 percent. But that’s not a high bar to beat, particularly with the amount of artificial risk currently being injected into the market from the Federal Housing Administration (FHA), which has assumed the burden since the financial crisis.
Non-existent wage growth is the U.S. labor market has hurt the housing market this year, as in the past several years. While some government economists — along with the housing lobby, the National Association of Realtors — argue the market is showing signs of rebound, much of the gain in households went into rentals, not home ownership.
Groundbreaking for single-family homes, which is the largest sector of the market, fell 6.7 percent to a 678,000-unit pace. Starts in this segment had hit their highest level since early 2008 in December, but again, was not a high bar to meet.
Projects in the Northeast fell by 3.5 percent, with most of the negative impact stemming from the multi-family sector. The Commerce Department blamed the terrible regional data on “harsh weather and storms.”
Meanwhile, groundbreaking in the volatile multi-family homes segment actually increased 7.5 percent to a 360,000-unit pace, offsetting some of the other segments drop offs. But rental vacancies are at their lowest level in more than two decades, indicating the American dream of home ownership remains extremely weak.
Further, multi-family starts are likely to push them even higher in 2015.
In January, permits for future home construction fell 0.7 percent to a 1.05 million-unit pace, while single-family permits fell 3.1 percent last month.
Multi-family permits rose 3.6 percent after tanking 5.2 percent in December.