The U.S. Census Bureau and the Department of Housing and Urban Development have released New Residential Construction statistics for January 2010.
Housing Starts data estimates how much new residential real estate construction occurred in the previous month. New construction means digging has begun. Adding rooms or renovating old ones does not count, the builder must be constructing a new home (can be on old foundation if re-building). Although the report offers up single family housing, 2-4 unit housing, and 5-unit and above housing data, single family housing is by far the most important as it accounts for 70-80% of total home building (which might be shifting more toward multi-family in the years ahead).
Building Permits data provides an estimate on the number of homes planning on being built. This indicator basically tracks how much future construction activity we should expect to take place in the future. This data is a part of Conference Board's Index of Leading Economic Indicators.
Here is the Reuters Quick Recap...
RTRS -US JAN HOUSING STARTS +14.6 PCT VS DEC -5.1 PCT (PREV -4.3 PCT)
RTRS -US JAN HOUSING STARTS 596,000 UNIT RATE (CONSENSUS 540,000) VS DEC 520,000 (PREV 529,000)
RTRS -US JAN HOUSING PERMITS -10.4 PCT VS DEC +15.3 PCT
RTRS -US JAN HOUSING PERMITS 562,000 UNIT RATE (CONSENSUS 560,000) VS DEC 627,000
RTRS -US JAN HOUSING COMPLETIONS -9.5 PCT TO RECORD LOW 512,000 UNIT RATE VS DEC 566,000
RTRS -US JAN HOUSING STARTS OF 5 UNITS OR MORE UP 80.0 PCT TO 171,000 UNIT RATE
Excerpts from the Release....
Privately-owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 562,000. This is 10.4 percent (±1.8%) below the revised December rate of 627,000 and is 10.7 percent (±1.2%) below the January 2010 estimate of 629,000.
Single-family authorizations in January were at a rate of 421,000; this is 4.8 percent (±2.3%) below the revised December figure of 442,000. Authorizations of units in buildings with five units or more were at a rate of 125,000 in January.
Privately-owned housing starts in January were at a seasonally adjusted annual rate of 596,000. This is 14.6 percent (±15.7%)* above the revised December estimate of 520,000, but is 2.6 percent (±9.8%)* below the January 2010 rate of 612,000.
Single-family housing starts in January were at a rate of 413,000; this is 1.0 percent (±8.6%)* below the revised December figure of 417,000. The January rate for units in buildings with five units or more was 171,000.
Privately-owned housing completions in January were at a seasonally adjusted annual rate of 512,000. This is 9.5 percent (±6.3%) below the revised December estimate of 566,000 and is 22.7 percent (±8.3%) below the January 2010 rate of 662,000.
Single-family housing completions in January were at a rate of 428,000; this is 7.0 percent (±7.0%)* below the revised December rate of 460,000. The January rate for units in buildings with five units or more was 77,000.
Here is a table recapping the report...
It is important to comment on HUD's rental market initiatives. From the latest edition of "Letters from the Desk of David Stevens"....
Last week, HUD reported to Congress that “worst case needs” for housing grew more than twenty percent from 2007 to 2009. “Worst case housing needs” are defined as renters with incomes that are less than 50 percent of the median in their area. Sadly, these families are very poor, receive no government housing assistance, and pay an excessive amount of their monthly income for rent, they are described as “worst case housing needs.” HUD reported that there were 7.1 million of these households in 2009. These unassisted households paid more than half their monthly incomes for rent, lived in severely substandard conditions, or both. In short, these households are one of the main demographics that the Multifamily Office works so diligently to serve.
HUD’s report links the dramatic increase in “worst case needs” to joblessness, but there is also a general lack of affordable housing, as well as a lack of financing and liquidity to solve this problem. The dedicated efforts of Carol and her staff throughout the country help to increase the supply of affordable and market-rate apartments. In 2010, FHA insured 1,011 multifamily loans, which equates to almost 157,000 units of housing, well over triple the amount it endorsed just two years ago in FY 2008. The evidence is in the unprecedented number of units, and also in the “worst case needs” report – the market relies heavily on HUD’s Multifamily Office to help supply and maintain many types of affordable rental housing. To deliver on these needs, Multifamily has in place several initiatives to transform the way HUD delivers rental assistance and supportive housing to low-income residents. LEARN MORE
The Bottom Line: Housing Starts and Building Permits are bouncing around near record low levels. Modest upticks in new construction activity are a factor of HUD's initiatives aimed at increasing the supply of affordable rental apartments (multifamily units).