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54 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G A NA LY T I C S S E C O N DA R Y M A R K E T ANALYTICS THE LATEST Housing Starts Slip Again, but is There a Silver Lining? Month-over-month numbers decline, but year-over-year shows big growth. T he U.S. Census Bu- reau and the Depart- ment of Housing and Urban Development re- cently released new residential construction statistics for Janu- ary 2016, and the numbers are reason for cautious optimism. According to Realtor.com Chief Economist Jonathan Smoke, much of the caution in this cautious optimism stems from the fact that January is typically the slowest month for new construction starts and is not necessarily a good prism through which to view new-start trends. Still, the numbers are the best 12-month-overall figures in almost a decade, showing that privately- owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 1,202,000. This is a mere 0.2 percent below the re- vised December rate of 1,204,000, but is 13.5 percent above the January 2015 estimate of 1,059,000. Single-family authorizations in January occurred at a rate of 720,000, which is 1.6 percent below December's of 732,000. Meanwhile, privately-owned housing starts in January were at a seasonally ad - justed annual rate of 1,099,000, 3.8 percent below December's estimate of 1,143,000, but 1.8 percent higher than January 2015. There were 731,000 single- family housing starts in January, 4 percent lower than in December, while there were 1.5 million privately-owned housing comple - tions in January, which is down 2 percent from December but 8.4 percent over the year prior. "The key findings from today's report is that month-to-month we're seeing little change in new construction, but year-over-year there is solid growth," Smoke said. "In addition, permits remain higher than starts, which is a good sign for expansion ahead." Ralph McLaughlin, chief economist at Trulia, said that "the 12-month rolling total of new housing starts continues to grow, and the February 2015-to-January 2016 period represents the best 12-month span for starts since July 2008." Moreover, he said, a share of new starts, led by development in the South, hovers around a 42-year high. According to McLaughlin, the South saw 556,700 new starts over the past 12 months, though the Northeast led the country in year-over-year growth, increasing by 30.2 percent. Too-hot Housing Markets Force Buyers to Look Elsewhere HOMEOWNERS FLOCK TO SOUTHERN, NORTHWESTERN CITIES FOR LOWER-PRICED PROPERTIES. A s housing markets heat up in some of the most popular met- ros across the country, many buyers are opting to cut ties and purchase a home in more affordable cities— particularly lower-priced markets in the South and Northwest. A report from John Burns Real Estate Consulting showed that buyers are leaving New York, Chicago, Boston, and Philadelphia and moving to places like Port- land, Seattle, and the many more affordable markets in the South. "Despite what we hear about the urbanization of America, more Americans are heading for the newer, more affordable hous- ing markets than the expensive, mature urban centers," said Annie Radecki, senior manager at John Burn Real Estate Consulting. Many industry experts and economists believe that U.S. hous- ing markets are in the midst of an affordability crisis that will only get worse over time, but what if today's rising home prices were not as high buyers think? Although home prices have been on the rise for the last few years, Black Knight Financial Ser- vices' December 2015 Mortgage Monitor found that homes are much more affordable than they were prior to the housing crisis, despite 43 consecutive months of annual home price appreciation. According to the report, in today's mortgage market, it takes 21 percent of the median monthly household income to purchase the median-priced home using a 30-year fixed-rate mortgage. This amount was 33 percent at the height of the market in 2006 and is under the average of 26 percent prior to the housing bubble. It takes 20 percent less of the median income to purchase the median-price home today than it did between 2000 to 2002. Ben Graboske, SVP at Black Knight Data & Analytics, noted that "the long-term impact of rising interest rates and home prices on affordability varies with geography and warrants close observation moving forward."