The affordable housing crisis in the United States has been largely driven by one factor—low housing supply. With supply limited and demand increasing, home prices have been pushed well beyond the pre-crisis peaks in most metro markets.
That’s why economists pay close attention to monthly housing construction data. Any sign of increased supply could signal relief for prospective homebuyers for whom prices have moved out of reach.
There are encouraging signs from the latest new residential construction report from the U.S. Census Bureau. Building permits in January rose to a seasonally adjusted annual rate of 1,396,000 units, a 7.4 percent increase over both December and January 2017. It’s the highest rate since 2007.
Housing starts rose by 9.7 percent over December and 7.3 percent over January 2017 to an annual rate of 1,326,000. The bad news in the short term is that housing completions fell by 1.9 percent compared to a month ago, although the annual rate of 1,166,000 is a 7.7 percent increase from a year ago.
Thumb through the tabs at the bottom of this data visual to see each stage of the construction process by region.
Housing permits were driven by a surge in multifamily units, which are historically volatile. The annual rate for two-to-four-unit housing permits spiked by a whopping 37.8 percent nationwide month-over-month, and 75.9 percent from a year ago.
Housing with five or more units jumped 25.4 percent from a month ago although just 3 percent from a year ago. The monthly trend was led in the South, which made up for huge declines in units in the northeast (16.9 percent drop).
Housing starts also saw the biggest jump in multifamily housing of five or more units, with the annual rate jumping 19.7 percent since December. That trend was driven by the northeast, which saw a 45.5 percent increase over a month ago, although just a 2.4 percent increase from a year ago. The West saw enormous gains in the annual rate of housing starts from a year ago, with a 70.1 percent increase.
Housing completions posted solid gains year-over-year, with the annual rate of total completions nationwide rising 7.7 percent. This was led by the northeast (31 percent) and the West (39.3 percent).
But January represented a drop compared to a month ago. Nationwide, January was a 1.9 percent decline from December, with drops occurring in every region except the West (0.7 percent).