According to a recent report by the US Commerce Department, home construction activity saw a slight drop in January this year, due to sharp declines in activity in the West and the Midwest.
During the month, starts for new houses fell 2.6% to an annual rate of 1.25 million units. The West saw a drop of 41.3%, while that of the Widwest was 17.9%.
However, a consecutive increase in permits for new homes indicates that construction activity in the country is poised to rebound. Also, the numbers are a huge increase from those during the same period last year, with buildings up 10.5%. While buildings with multiple units had dropped 8%, construction starts for single-family houses still increased nearly 2%.
The recent trend for single-family units had been upwards, but experts like Ian Shepherdson from Pantheon Macroeconomics are still doubting about its sustainability. In a statement, Shepherdson said:
“We are curious to see if this can last, given that homebuilders’ sentiment has already given up two-thirds of the gain reported immediately after the election, with buyer traffic back down at its October level. For now, though the core numbers look robust.”
His views are based on the home construction trend that has been more towards rental apartment buildings, as younger people tend to resist buying their own properties.
Compared to last year, rental apartment buildings are up 26%, while that of single-family homes is only up 6%.