Housing Starts Disappoint As Building Permits Surge, Driven By Rentals

Tyler Durden's picture

While having been gradually relegated to B-grade economic data status, today's housing starts and building permits report from the Commerce Department, painted a mixed picture, with January starts declining 2.6%, from 1.279million to 1.246 million, below expectations of a 0.1% increase, however due to the upward prior revision, today's absolute print beat expectations of 1.222 million units started (forecast range 1168k - 1320k from 77 economists). Looking inside the data, single family starts rose to 823k, while multifamily starts fell to 423k in Jan.

But while January housing starts were lukewarm, building permits jumped by far more impressive 4.6%, rising from 1.228MM to 1.285MM, driven entirely by multi-family, aka rental, units which soared by 23.5%, as single-family unit permits declined by 2.7% to 808K.

Finally, while little tracked, housing completions fell to 1047k in Jan., from 1109k the prior month, as single-family completions rose to 800k; multifamily completions fell to 247k in Jan.

Overall, s table housing report, although as the charts below show, both starts and permits remain locked in a multi-year range, well below the pre-crisis highs, as builders are looking for a signal to take take a major push forward in new home construction.

Housing Starts:

Building Permits:

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LawsofPhysics's picture

Building more sharecropper shacks, feudalism 2.0 bitchez!!

edifice's picture

Soviet-style housing blocks?

hotrod's picture

The Rental building market in Atlanta is YUGE.  Cranes everywhere. Never seen so many new units.  No one can afford a home inside the perimeter so all that is left is rent. The roads becoming so congested hard to travel.  Grid lock coming.

spastic_colon's picture

wonder how much of that property the clintons stole from their voters and now own thru the many phony shell companies they set up?

A. Boaty's picture

I see three legs propping up the housing market:

1. Shadow inventory, i.e., banks intentionally keeping foreclosed properties off the market.

2. Foreign direct investment

3. Institutional investment

Genuine household formation? Not so much.

LawsofPhysics's picture

Funny, this is exactly like 2007/2008...

directaction's picture

Just imagine what all these cheap stick apartment blocks will look like in thirty years. Or twenty. 

PodissNM's picture

What about the cheap stick houses?  The quality seems to be about the same as a new mobile home. 

armageddon addahere's picture

Do they differentiate between rental units and condos in the mulifamily category? In Canada no one has built rentals in 40 years due to rent controls but new condos are being built all the time.

What percentage of the multi family units represent condos? I'm just saying, they don't all have to be rentals. A lot of places around the world are going to condos instead of single family dwellings on separate lots.

HRH Feant's picture
HRH Feant (not verified) Feb 16, 2017 1:48 PM

Good! That means single-family residential housing will increase in value due to tight supply. I don't see anything wrong with that. Don't want to buy a house? Fine! Go live in a city in a coffin flat.

Houses Depreciate's picture

With record high amounts of housing inventory and collapsing demand, why build more?