The Commerce Department’s Census Bureau and U.S. Department of Housing and Urban Development reported This Week in Real Estate that single-family housing starts declined by 4.7% in January, reaching a seasonally adjusted annual rate of 1.004 million. However, this still represents a 22% increase from the previous year, marking the third consecutive month surpassing the 1 million mark. Single-family permits rose by 1.6% month-over-month in January to a rate of 1.02 million units, the highest level since May 2022. The number of single-family homes under construction in January matched the highest reading since June 2023, standing at 680,000. Homebuilder confidence experienced its third consecutive monthly growth in February, reaching the highest level since August 2023. Mortgage applications for new home purchases surged by 19.1% in January compared to the previous year, with a 38% increase from December 2023, according to the Mortgage Bankers Association. Additionally, data from the Bureau of Labor Statistics revealed that the Consumer Price Index (CPI) exceeded expectations in January, increasing by 0.3%, the largest monthly rise since September. Core inflation changed little at an annualized rate of 3.9%. Below are a few newsworthy events from the second week of February that influence our business: HOUSING STARTS DECLINE IN JANUARY ON MULTIFAMILY WEAKNESS. A sharp decline in multifamily starts pushed overall housing starts down in January. Single-family starts decreased 4.7% to a 1 million seasonally adjusted annual rate. However, single-family starts are up 22% compared to a year ago. The multifamily sector, which includes apartment buildings and condos, decreased 35.6% to an annualized 327,000 pace. Single-family permits increased 1.6% to a 1.02-million-unit rate, the highest since May 2022. Multifamily permits decreased 7.9% to an annualized 455,000 pace, the lowest since April 2020. The number of single-family homes under construction stood at 680,000 in January, matching the best reading since June 2023. Read the full story here.BUILDER SENTIMENT POSTS THIRD CONSECUTIVE MONTHLY GAIN. Expectations that mortgage rates will continue to moderate in the coming months, the prospect of future rate cuts by the Federal Reserve later this year, and a protracted lack of existing inventory helped provide a boost to builder sentiment for the third straight month. Builder confidence in the market for newly built single-family homes climbed four points to 48 in February, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This is the highest level since August 2023. Read the full story here.U.S. INFLATION HOTTER THAN EXPECTED IN JANUARY. The Consumer Price Index rose more than forecasted in January, highlighting again the bumpy road to disinflation. Consumer prices were up 3.1% in January from a year earlier, down from 3.4% in December, according to data released by the Bureau of Labor Statistics on Tuesday. On a monthly basis, the index increased by 0.3%, the biggest monthly increase since September. Core inflation, the Fed’s preferred inflation gauge, changed little at 3.9% annually. The Fed’s target for core inflation remains 2%. “Overall, the nation’s economy remains strong, so don’t expect an interest rate cut this half of the year unless consumer prices take a larger, downward trajectory,” CoreLogic Chief Economist Selma Hepp said in a statement. Read the full story here.
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