Another decline in permits overshadows January's jump in housing starts

Wells Fargo Research Team Wells Fargo

Summary

Housing starts surprised to the upside in January, jumping 7.2% over the month. The rise was owed to a nearly 30% surge in multifamily, while single-family declined slightly during the month.

The underlying details painted a relatively weaker picture of residential construction.

For instance, the substantial gain in multifamily needs to be taken a grain of salt. Multifamily starts tend to bounce around on a monthly basis and are often subject to large revisions.

Single-family starts did not show a similar rise and declined by 2.8% in January. Home builders appear to be scaling back production as inventories remain elevated relative to sales.

What's more, both single-family and multifamily permits fell to start the year. The downtrend in permits suggests starts will remain somewhat sluggish in the months ahead.

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Wells Fargo Research Team

Wells Fargo

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