Housing starts unexpectedly increased, but the rise was entirely driven by multi-family construction. Multi-family starts had remained subdued ahead of this report, which pointed to potential pressure on rental prices that could contribute to higher inflation. However, with multi-family starts jumping 30% in January alone, that concern would be less significant if this trend continues. Single-family starts, meanwhile, declined. Housing permits moved lower for both single-family and multi-family units, suggesting that despite the increase in starts, there is less future supply in the pipeline.
What’s the bottom line? The increase in housing starts was driven entirely by a surge in multi-family construction, which could help ease rental inflation if the trend continues. However, declining permits signal weaker future supply, particularly in single-family housing.