skip navigation

By the Numbers

Featuring brief segments of economic analysis from our senior economist Michael Bazdarich, PhD.

The economic analysis we previously featured in By the Numbers is now available on the Western Asset Blog. This page will no longer be updated.

Housing Starts Hold Up for the Most Part in January

The last three months of 2014 saw a mini-explosion in single-family housing starts, so the focus of interest in today’s data was whether those preceding gains would be sustained in the new year. As you can see in the accompanying chart, the answer is that they were—mostly. Yes, single-family starts dropped 6.7% in January, but this comes off a 9.7% increase over the previous three months. And as you also can see in the chart, even the lower January level of starts remains noticeably above the prevailing levels of the previous two years.

After the plunge during the recession and then an upturn over 2011-13, single-family housing starts had held steady through late-2014. Since September 2014, starts have begun to trend higher again. Sure, the current level of starts is way below what it should be were household formation and homeownership proceeding at rates consistent with population growth. However, such demographic trends are still faltering, and homebuilding nevertheless appears to have begun to move higher again.

There are still some wrinkles to be ironed out of the picture. New-home sales have somewhat risen recently, but not yet enough to fully vindicate the late-2014 pop in starts (green line in chart). The same can be said of single-family permits (red line). Meanwhile, the late-2014 spurt in single-family homebuilding was partially offset by declines in multi-family homebuilding. So overall, housing is something of a three steps forward, two steps back story. Then again, this has been true of most of the US and global economies throughout the current expansion.

We’ll be more confident of the homebuilding uptrend when it has been sustained a few more months and when permits and new-home sales are up commensurately. Still, starts have behaved much better than we would have guessed a few months ago, and today’s decline does not significantly alter that fact.

Sales and Starts of New, Single-Family Homes
Housing Starts and Sales Chart
Source: Census Bureau. As of 31 Jan 15

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 45 years of experience to his position. "By the Numbers" will address economic data releases that are pertinent to a broad range of investors.

Prior to joining the Firm in 2005, Mike ran his own consulting firm, MB Economics. He earned his PhD in Economics at the University of Chicago.

Sign up to receive email updates as new reports are released.

© Western Asset Management Company, LLC 2022. This publication is the property of Western Asset and is intended for the sole use of its clients, consultants, and other intended recipients. It should not be forwarded to any other person. Contents herein should be treated as confidential and proprietary information. This material may not be reproduced or used in any form or medium without express written permission.
Past results are not indicative of future investment results. This publication is for informational purposes only and reflects the current opinions of Western Asset. Information contained herein is believed to be accurate, but cannot be guaranteed. Opinions represented are not intended as an offer or solicitation with respect to the purchase or sale of any security and are subject to change without notice. Statements in this material should not be considered investment advice. Employees and/or clients of Western Asset may have a position in the securities mentioned. This publication has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider its appropriateness having regard to your objectives, financial situation or needs. It is your responsibility to be aware of and observe the applicable laws and regulations of your country of residence.
Western Asset Management Company Distribuidora de Títulos e Valores Mobiliários Limitada is authorized and regulated by Comissão de Valores Mobiliários and Brazilian Central Bank. Western Asset Management Company Pty Ltd ABN 41 117 767 923 is the holder of the Australian Financial Services Licence 303160. Western Asset Management Company Pte. Ltd. Co. Reg. No. 200007692R is a holder of a Capital Markets Services Licence for fund management and regulated by the Monetary Authority of Singapore. Western Asset Management Company Ltd is a registered Financial Instruments Business Operator and regulated by the Financial Services Agency of Japan. Western Asset Management Company Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) (FRN 145930). This communication is intended for distribution to Professional Clients only if deemed to be a financial promotion in the UK as defined by the FCA. This communication may also be intended for certain EEA countries where Western Asset has been granted permission to do so. For the current list of the approved EEA countries please contact Western Asset at +44 (0)20 7422 3000.