US housing starts drop for a fifth month, longest streak since 2009

NEW US home construction retreated for a fifth month in January to the lowest level since June 2020 as elevated mortgage rates continue to keep a lid on housing demand.

Residential starts decreased 4.5 per cent last month to a 1.31 million annualised rate, marking the longest stretch of declines since 2009, according to government data released on Thursday (Feb 16). Single-family homebuilding fell to an annualised 841,000 rate.

Applications to build, a proxy for future construction, were little changed at an annualised 1.34 million units. Permits for construction of one-family homes declined 1.8 per cent.

The median estimate in a Bloomberg survey of economists called for a 1.36 million pace of total residential starts.

The housing sector has so far bore the brunt of the Federal Reserve’s barrage of interest-rate hikes, which have sent mortgage rates higher and sapped demand for home buying. Even though homebuilder sentiment rose again in February, the outlook is still shaky as the heightened prospect of tighter Fed policy presents further upside risk to borrowing costs.

Multifamily starts fell and permits for new construction rose.

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Groundbreakings on single-family homes fell in the Northeast, possibly reflecting snowstorms, as well as the West, which could have been impacted by severe flooding in California. Meantime, one-family new construction rose in the Midwest and South.

The number of homes completed rose slightly, led by single-family construction.

Data on existing and new-home sales for January will be released next week. BLOOMBERG