Signs of strengthening conditions in the housing industry are emerging, although progress appears to be taking the two-steps-forward/one-step-back approach with broad swings between increasing and declining activity. This ongoing instability in new residential construction reflects month-by-month changes in home buyer confidence, according to David Crowe, NAHB’s chief economist. Housing’s recovery will continue to be a bit bumpy.
Overall residential construction permits declined in November to a seasonally adjusted annual rate of 544,000, increased 13 percent in December, and slid 10.4 percent in January to 562,000. Permits for multifamily buildings (five or more units) followed the same pattern, falling 22.4 percent in January from the previous month. Single-family permits experienced two months of small increases, but then declined 4.8 percent in January to a rate of 421,000, about 17 percent below the previous year.
After a moderate gain in November and a slightly less moderate loss in December, single-family housing starts slipped by 1 percent in January to a rate of 413,000—19.2 percent below the rate of January 2010. Multifamily starts leaped 80 percent ahead in January after a solid increase in December to a rate of 171,000, which put overall starts in January up to 14.6 percent.
Single-family completions declined by 7 percent in January after a slight increase in December. However, this was just 2.7 percent below the rate of January 2010. After increasing in November and declining in December, multifamily completions fell again by nearly 20 percent in January—62 percent below the previous year’s rate.
The American Institute of Architects’ (AIA) Architectural Billings Index, which tracks ahead of commercial real estate investment, scored lower in January than in December, slipping nearly 4 points to a score of 50. The AIA notes this merely reflects relatively stable demand for design services, although market conditions are still weak.