The number of new homes that were completed in January rose to a seasonally adjusted annual rate of 1.65 million, 7.6% above the revised December estimate of 1.53 million homes, and 9.8% above the rate from one year ago, according to the U.S. Census Bureau.

But that was about the only good news from the bureau’s latest monthly residential construction report, which includes both single-family homes and multifamily developments. Housing starts in January fell 9.8% from the previous month to a seasonally adjusted rate of about 1.37 million and was 0.7% below the rate a year ago. That was below consensus expectations of 1.39 million units. Building permits were up 0.1% from December to the annual rate of 1.48 million but were 1.7% below January 2024 levels of 1.5 million.

Single-family homes that were completed in January were at a rate of 982,000, 7.1% above the revised December rate of 917,000. Single-family housing starts in January were at a rate of 993,000, down 8.4% from December’s level of 1.08 million. Authorizations for single-family homes were virtually unchanged in January at 996,000.

The January completion rate for multifamily units in buildings with five units or more was at an annual rate of 652,000. The number of units started in multifamily buildings was at an annual rate of 355,000, and authorizations for apartments were at an annual rate of 427,000.

First American Deputy Chief Economist Odeta Kushi said that when smoothing out the housing data by using six-month averages, it becomes apparent that starts and permits are bottoming out and beginning a positive trend. Also, she said that single-family starts remain nearly 20% above the five-year pandemic average and permits are up 24% from the average during the five-year period.

However, she also pointed out that recent surveys show builder sentiment remains strongly negative, dipping to the lowest level since September. Also, optimism about single-family sales expectations for the next six months has plummeted.

“A colder than usual January, mortgage rates crossing the 7% threshold in January, and builder pessimism reflecting lingering supply-side and affordability headwinds combined to drag housing starts down in January,” Kushi said in a statement.