New housing starts grew strongly. The 12-month rolling total of starts which is a more statistically robust measure of trends in housing start data grew 9.4% year-over-year in January to 1,111,900 starts. This represents the most starts in a 12-month period since July 2008, despite a dip in home building sentiment reported yesterday by the NAHB. The dip in confidence was less likely due to a lack of demand for new homes, and more likely related to uncertainty over the health of the global economy. Though the upward trend is good news for the housing sector, the 12-month rolling total is still 23% below a 50-year average of 1,445,779 starts.
Starts of 5+ unit buildings have also shown strong growth over the past year, increasing 10.7% from a 12-month rolling total of 341,900 in January 2015 to 383,600 in January 2016. Multifamily starts in 5+ unit buildings continue to hover around a 42-year high. This upward trend of new starts in multifamily units which tend to primarily consist of renter occupied units likely mirrors strong the growth in new renter-households over the past five years, and may help moderate strong rent growth. However, the share appears to be entering a plateau phase, so we expect increases in multifamily starts may flatten in the rest of 2016.
Finally, regional housing starts continue to show disparities. The South leads the country with a 12-month rolling total of 556,700 new starts, which is the best 12-month span since June 2008. The 12-month rolling total for the Midwest in January was 151,500 units, which is tied for the lowest total since March of 2014. The Northeast led the country in year-over-year growth, increasing by 30.2% and growing from a 12-month rolling total of 109,600 new starts in January 2015 to 141,900 in January of 2016. New starts in the West remain solid, with a 12-month total of 261,700 and year-over-year growth of 9.1%. The disparity between the Midwest and other regions mirrors relatively slower economic growth in Midwestern markets and continued expansion in the South and West.
Housing Starts Summary:
- The 12-month rolling total of new housing starts in January were up 9.4% year-over-year;
- The 12-month rolling total of new housing starts in 5+ units in January was up 10.7% year-over-year, and makes up over a third of new starts.
- The 12-month rolling total of housing starts in the South was the best since June 2008.
