Stagnation in new housing permits in January suggests restrained US housing construction in early 2025 as annual permit and start figures lag the prior year.
Domestic polyurethane (PU) market expectations for 2025 did not improve in January, with participants planning for flat to modest increases in consumption for the year as a whole. The building blocks of polyurethanes, such as isocyanates like polymeric MDI (PMDI), go into insulation, roofing applications and carpet underlay. PMDI demand so far has been largely restocking activity rather than end-uses in construction, as expected in the first few months of the year. Most participants anticipate stronger demand in the second half of the year, an expectation which January's slow start to construction activity seems to support.
February PMDI contract prices settled at 95-103¢/lb, a rollover from the previous month as supply and demand are stable, according to Argus. However, multiple price increase announcements have come out and as cost inputs continue to put pressure on the market many participants expect prices to rise in the coming months.
Privately-owned housing permits were at a seasonally-adjusted annual rate of 1.483mn units in January, according to data from the US Census Bureau and the Department for Housing and Urban Development (HUD). While January was up 0.1pc from December's rate, it was 1.7pc lower than the year prior and currently stands below the rates of each of the first three months of 2024.
If January's lower annual comparison were to extend through the rest of the first quarter, it could set 2025's pace of new housing construction behind the prior year's through the early peak building season that lasts from the spring to early summer, as permits serve as a forward indicator for new housing starts.
Single-family permits stood at 996,000 units in January, unchanged from December after the rate increased for three straight months. But while the recent uptrend in single-family permits presents a bright spot in the housing construction outlook, January's rate was still 3.4pc below the previous year.
Housing starts in January were at a seasonally-adjusted annual rate of 1.366mn units, 9.8pc below December and 0.7pc lower than January 2024. Single-family starts were at a rate of 993,000 units, 8.4pc below December and 1.8pc lower than the previous year. The stagnant month-to-month and lower annual comparisons for permits could extend declining housing starts in the months ahead.
The latest builder sentiment survey for February enhanced the mixed forward view of construction activity brought by January's tepid permit rate. February's reading reversed the small uptick in sentiment registered in January, falling back five points to 42, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
February's result was the lowest level in five months and reflected builders' increasing anxiety about the construction market's outlook, especially with the Federal Reserve signaling it is reluctant to lower borrowing costs until inflation slows further. Any index reading below 50 denotes a weak market environment.
NAHB Chairman Carl Harris said that builders were still hopeful that regulatory reform could spur development, but uncertainty over tariffs and high housing costs was resetting 2025 expectations in February.
