The numbers: US homebuilders began building homes in December at a seasonally adjusted annual rate of 1.67 million, up 5.8% from the previous month’s figure, the US Census Bureau reported Thursday.
Permits for new homes were granted at a seasonally adjusted annual rate of 1.71 million, an increase of 4.5% compared to November.
Compared to December 2019, housing increases have increased by 5%, while the number of permits has increased by 17%. It was the start of top-level housing, and building permits have been reached since 2006.
Both numbers exceeded analyst expectations and reflected growth in the single-family sector. Economists polled by MarketWatch had expected housing to start at a pace of 1.56 million and building permits coming in at a rate of 1.61 million.
What happened: The growth in the single-family sector resulted in an increase in the number of home starts and building permits. On a monthly basis, single-family returns were up 12%, while single-family permits were up 7.8%. Relatively speaking, new construction of multi-family buildings fell by 15.2% between November and December, while multi-family permits for buildings with five or more units fell by 2%. Permits for duplexes, triplexes and quadplexes decreased by 11.5%.
On a regional basis, all parts of the country showed an increase in activity, except in the Northeast, where it decreased by about 7.2%. Although even in the Northeast, permits for single-family homes were increased monthly.
Likewise, the Northeast was the only region where the number of housing principles declined – both in general and for the single-family sector. The Midwest saw the greatest growth in the number of starter homes, with an increase of 32%.
The big picture: Buyer demand may be declining in the face of high house prices and a lack of inventory, but still remains high compared to last year. That gives builders “a strong incentive to keep building,” said Danielle Hale, Realtor.com chief economist.
Overall, housing starts in 2020 are up nearly 12% from 2019, despite the delay last spring due to the pandemic. Builders’ optimism may diminish somewhat in light of decreasing buyer foot traffic and rising costs associated with the purchase of land and materials. But the underlying need for new homes is still there, which means that the construction sector will have to be busy for a while.
What they say: “New mortgage applications are also rising again, perhaps to be ahead of the higher interest rates. Despite slow population growth, residential construction remains well supported by record-low mortgage rates (so far), record-lean resale listings and the migration of remote workers to the suburbs, ”wrote Michael Gregory, deputy chief economist at BMO Capital Markets. in a research note.
“The start of the housing has recovered and was at the fastest pace in more than 14 years. Astonishing, given the COVID-related downturn in the spring. There aren’t enough homes in this country to go around, and we need a long-lasting wave of construction to meet demand, ”said Holden Lewis, housing and mortgage expert at personal finance website NerdWallet.