ORANGE COUNTY, CA—Housing starts are up and foreclosure activity down for the first month of 2018, indicating a strong start for the sector, ATTOM Data Solutions and First American Financial Corp. say.
First American reports that a new-residential-construction report for January shows that the number of permits issued—a leading indicator of housing starts—increased by 7.4% year over year, and housing starts increased by 7.3% compared with a year ago. Also, the stock of housing units authorized to be built increased by 10.5%, and the number of housing units under construction also increased by 4.6% on an annual basis. The number of completed homes—additional new net supply added to the housing stock—increased by 7.7% compared with a year ago.
According to Mark Fleming, chief economist for First American, as we analyze the housing-starts data, it's also important to consider the impact of construction labor on the velocity of new-home construction. The employment-situation report, released earlier this month, indicated an increase of 5,000 residential-construction jobs between December 2017 and January 2018, meaning the number of residential-construction jobs is now 1.3% higher than a year ago. “The growth in residential-construction jobs supports further improvement in the pace of home building because building a home does not readily lend itself to outsourcing and automation,” said Fleming in a prepared statement.
He added that the rise in permits, the leading indicator of housing starts, in conjunction with the rise in construction employment this month, signals an upward trajectory for housing starts in 2018. And, based on this month's data, construction employment has eased as a headwind to housing starts.
In addition, US foreclosure activity in January decreased on a year-over-year basis for the 28th consecutive month, although it was up 7% from December, ATTOM Data Solutions reports. A total of 28,777 US properties started the foreclosure process in January, up 9% from the previous month, but still down 12% from a year ago. States with the highest foreclosure rates were New Jersey, Delaware, Maryland, Illinois and Ohio.
ATTOM Data Solutions also reports a total of 26,597 REOs nationwide in January, up 6% from the previous month, but still down 17% a year ago. Counter to the national trend, 11 states posted a year-over-year increase in REOs last month, including New Jersey, Ohio, Georgia and Arizona.
As Daren Blomquist, SVP at ATTOM Data Solutions, told GlobeSt.com in March 2017, a foreclosure uptick in some states does not necessarily indicate trouble brewing either nationally or in those markets, but rather that some states are still working through a legacy of bad loans from before the recession.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
