- Single-family construction drove gains with fresh 14-year high
- The full year saw work start on 1.38 million housing units
U.S. home construction starts rose in December to the best pace since late 2006 as builders responded to the robust demand for single-family housing.
Residential starts climbed by 5.8% to a 1.67 million annualized rate, according to government data released Thursday. That topped all estimates in a Bloomberg survey of economists that had a median forecast of 1.56 million and compared with an upwardly revised 1.58 million rate in November.
The figures are the latest sign of the housing market’s strong rebound. The Federal Reserve’s ultra-easy monetary policy has helped push mortgage rates to record lows that are attracting more potential home buyers and underpinning historically strong demand.
“Housing remains a bright spot in an otherwise weak economy,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said in a note. “Lean inventories will likely continue to provide support to building activity over coming months, mostly in the single-family sector.”
A gauge of homebuilder stocks rose for an eighth straight day.
The full year saw a total of 1.38 million starts, with single-family construction climbing to 991,200, both the highest since the mid-2000s, according to the report, which is published jointly by the Census Bureau and the Department of Housing and Urban Development.
Meanwhile applications to build, a proxy for future construction, increased 4.5% in December to a 1.71 million annualized rate that was also the best since 2006.
The pandemic has also driven a surge in demand for larger properties with more space for families to work and learn at home. With lean inventories, builders have been rushing to meet demand. A measure of homebuilder sentiment eased in January, but remains near a recent record.
“Builders are doing their best to catch up to a massive upswing in demand that was heightened by the pandemic. They appear to be making progress, but the market for new homes will undoubtedly remain tight for the foreseeable future,” Stephen Stanley, chief economist at Amherst Pierpont Securities LLC, said in a report.
Starts of single-family starts climbed 12% to a 1.34 million pace, the biggest gain since June, another post-2006 high. The increase was the eighth straight, the longest such stretch in 50 years. Multifamily starts, which tend to be volatile and include apartment buildings and condominiums, eased to 331,000.
While housing has been strong, the labor market has struggled to recover. A separate government report showed Thursday that initial filings for state unemployment benefits fell only slightly last week and remained elevated at 900,000 in the week ended Jan. 16.
- Single-family housing permits rose 7.8% to a 1.23 million pace, the fastest since 2006
- Construction climbed in three of four regions, led by a 32.1% surge in the Midwest, with starts in the Northeast seeing the lone decline
- The total number of residential projects authorized but not yet started edged lower to 185,000, but remains historically strong, suggesting builder backlog remains robust
— With assistance by Michael Sasso