A temporary sag in interest rates and the warmest January on record nationwide combined to bring about a 14.5 percent surge in new home construction for the month, the U.S. Commerce Department reported.
The January pace of new-home construction rose to a seasonally adjusted annual rate of 2.276 million units, the highest on record since 1973. The pace was 4.0 percent above a year ago.
Single-family housing starts rose 12.8 percent to a new record pace of 1.819 million units for the month. This was 2.8 percent above a year ago.
"Builders apparently took advantage of the good weather and low interest rates in January to pick up the pace of production after a cold and wet December," said David Pressly, president of the National Association of Home Builders (NAHB) and a home builder from Statesville, N.C.
"The January surge in housing starts was mainly weather-related," said NAHB Chief Economist David Seiders. "Market fundamentals suggest that this pace of activity will be hard to sustain, and NAHB’s survey of single-family builders points toward some cooling down in coming months, largely because of eroding affordability conditions."
All four regions reported strong increases in housing starts for the month. Construction of new homes and apartments rose 29.2 percent in the Northeast, 23.7 percent in the Midwest. 8.7 percent in the South and 16.9 percent in the West.
Multifamily housing starts increased by 21.9 percent for the month to a seasonally adjusted pace of 457,000 units. This was 9.1 percent above the pace of a year ago. "Our surveys of multifamily builders show that the rental market is firming up to some degree, with declining vacancies and rising rents," said Seiders.
Issuance of total building permits increased 6.8 percent to a seasonably adjusted rate of 2.217 million units for the month. Single-family permit issuance was up 2.4 percent to a pace of 1.685 million units for the month. The pace of multifamily permit issuance increased 23.7 percent to a pace of 532,000 units for the month.