Housing starts unexpectedly plummet to lowest level in five months

U.S. new home construction fell to a five-month low in January, highlighting the continued challenges facing the housing market.

Housing starts Sales fell 14.8% last month to 1.33 million units for the year, according to new data from the U.S. Department of Commerce released Friday. This is well below the pace of 1.46 million units expected by economists polled by Refinitiv.

Housing starts fell to the lowest level since August 2023, marking the biggest single-month decline in construction since the early days of the coronavirus pandemic.

Construction applications, which measure future construction, also fell in January, down 1.5% for the month at an annualized rate of 1.47 million units. Compared to the same period last year, the number of building permits increased by approximately 8.6%.

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Home under construction in Sacramento, California on July 3, 2023. (David Paul Morris/Bloomberg via Getty Images/Getty Images)

“A resurgence in home construction is coming, but it didn’t arrive in January,” said Robert Frick, business economist at Navy Federal Credit Union. “Building starts and permits have been down since December because of higher mortgage rates and maybe a little bit of a cold snap. We know that builders are ready to increase if rates come down, but that… It could be as early as spring.”

The housing market has been plagued by astronomical rises in mortgage rates over the past two years, but bad weather may have weighed on growth in many parts of the country last month.

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“The downside surprise in January’s housing data appears to be primarily weather-related, as is the month’s weakness in retail sales and industrial production,” said Bill Adams, chief economist at Comerica Bank. “One sign of that is that the decline in building permits for the month was much smaller than the number of housing starts. It’s easier to file paperwork in a snowstorm than it is to break ground on a new home.”

The data was released a day after the National Association of Home Builders/Wells Fargo Housing Market Index. Single-family housing market, which rose for the third consecutive month to 48. Measurements below 50 are considered negative.

construction workers in new york

Workers assemble the frame of a home under construction at the Cold Spring Barbera Homes subdivision in Loudonville, New York, on November 8, 2023. (Angus Mordaunt/Bloomberg via Getty Images/Getty Images)

Builder sentiment began a steady decline in late summer after mortgage rates soared above 7%, dampening demand from prospective homebuyers. However, borrowing costs have fallen over the past two months. federal reserve The Bank has indicated that it will end its rate hikes and begin lowering them by the end of the year.

“Mortgage rates remain too high for many prospective buyers, but if mortgage rates continue to fall this year, pent-up demand will bring more buyers into the market,” said NAHB Chair and custom home builder Alicia Huey. It is expected that they will enter the market.” I’m a developer from Birmingham, Alabama.


Interest rates on popular 30-year fixed mortgages are currently hovering around 6.77%, according to Freddie Mac, down from a high of 7.79% in late October but well above the pre-pandemic average of 3.9%. There is.



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