January Housing Starts: The Good Times Keep Rolling

• January housing starts were down 3.6% from upwardly revised December numbers, to 1.57M (SAAR), but were up 21.4% from January 2019 according to the U.S. Census Bureau.
• January housing permits rose 9.2% from December and 17.9% from a year ago, to 1.55M units (SAAR).
• Housing completions fell 3.3% from December but were up 1.5% from a year ago, to 1.28M (SAAR).

Builders’ exceptionally strong finishing kick during the closing months of 2019 gave the housing market a ton of momentum heading into 2020 – momentum unlikely to be meaningfully dented by the small monthly pullback in housing starts seen in January’s building data. Permits and starts were both well above year-ago levels and gains were widespread across all major regions. Taken altogether, the past few months represent easily the best sustained performance by builders since well before the Great Recession, and there’s currently little reason to suspect this can’t continue. Homebuilder confidence slipped modestly in January, but remains near multi-year highs and solidly in positive territory. An ongoing and increasingly severe inventory shortage means buyers are starving for new supply of any kind, including the often higher-priced offerings delivered by home builders. And with unemployment low, wage growth steady and mortgage interest rates near rock-bottom, there’s ample reason to believe buyers will flock to the market as the weather warms, not shy from it. Ongoing concerns about the price and availability of land, labor and lumber are always top-of-mind for builders, but aside from any unforeseen geopolitical or economic shock and/or a sudden escalation of coronavirus fears, builders’ good vibes look set to roll well into 2020.