Housing permits, considered a leading indicator for future construction activity and the broader economy, surged to a 15-year high in January. The jump was supported by increases in the dominant single-family category and the multifamily category. Total housing starts did fall for the month, but the drop comes on the heels of a sharp gain in the previous month. Overall, housing continues to be one of the strongest areas of the economy.
Total housing starts fell to a 1.580 million annual rate from a 1.680 million pace in December, a 6.0% decrease. Month-to-month volatility in housing construction can be influenced by weather conditions. From a year ago, total starts are off 2.3%. Still, January was the fourth-highest pace since 2006.
The dominant single-family segment fell 12.2% for the month to a rate of 1.162 million. Despite the drop, single-family starts are up 17.5% from a year ago. Starts of multi-family structures with five or more units jumped 16.2% to 402,000 but are still off 35.1% over the past year.
For housing permits, total permits rose 10.4% to 1.881 million in January (see first chart). Total permits are 22.5% above the January 2020 level and at the highest level since May 2006. Single-family permits were up 3.8% at 1.269 million, the highest since August 2006 (see chart) while permits for two- to four-family units rose 19.6% to 55,000 and permits for five or more units surged 28.0% to 557,000. Combined multifamily permits were 612,000, the highest since June 2015 and second-highest since January 1990.