Housing Starts Rose More Than Expected in December
Builders broke ground in December on more U.S. homes than forecast as a jump in apartment construction helped cap the seventh straight yearly increase, a report from the Commerce Department showed Jan. 19.
Key Points
• Starts rose 11.3% to a 1.23 million annualized rate (forecast was 1.19 million) from a revised 1.10 million pace.
• Permits, a proxy for future construction, decreased 0.2% to a 1.21 million annualized rate (forecast was 1.23 million).
• Single-family starts declined 4% to a 795,000 rate, while multifamily construction jumped 57.3% to 431,000.
Big Picture
• Residential construction ended the year on a stronger note, a sign the industry will continue to be in a steady recovery. Even with a recent pickup in mortgage rates, borrowing costs remain attractive for those who qualify for a mortgage, and the job market is still solid. While faster growth in construction is impeded by a shortage of skilled workers and available ready-to-build lots, builder confidence is close to an 11-year high on optimism President-elect Donald Trump and the new Congress will ease regulations.
The Details
• Permits for single-family homes rose 4.7% in December, but multifamily permits declined 9%.
• Starts rose from November in three of four U.S. regions, led by the Midwest; construction in the South declined.
• Wide range for error, with a 90% chance that December increase in total housing starts ranged from 0.9% to 21.7%.
• For all of 2016, there were 1.17 million starts, up from 1.11 million in 2015 and the most since 2007.
