There was a strong rise in US housing starts in December to a seasonally adjusted annual rate of 1.61 million units, a new 13-year high.
The data from the HUD and Commerce Department shows a 16.9% increase in starts from the previous month with single-family starts up 11.2% to 1.06 million and multifamily up 29.8% to a 553,000 pace.
“The year ended on a high note with solid gains in single-family and multifamily production,” said Danushka Nanayakkara-Skillington, National Association of Home Builders assistant VP of Forecasting and Analysis. “And while the December estimates will likely be revised down, the trend moving forward is still positive.”
Total housing starts for 2019 were 1.29 million, a 3.2% gain over the 1.25 total from 2018. Single-family starts in 2019 totaled 888,200, up 1.4% from the previous year. Multifamily starts in 2019 totaled 401,600, up 7.3% from the previous year.
Trend must continue
First American Deputy Chief Economist Odeta Kushi says that starts need to keep rising.
“Limited existing homes available for sale have made for a competitive market, resulting in a busier-than-anticipated January,” she said. “The market is ripe for homebuilders to ramp up new home construction to meet the growing demand. This month’s 10.8% year-over-year increase in single-family permits is a welcome sign of new inventory to come.”
Month-over-month, overall permits decreased 3.9% to a 1.42 million unit annualized rate in December. Single-family permits decreased 0.5% to a 916,000 rate while multifamily permits also fell 9.6% to a 500,000 pace.
Holden Lewis, NerdWallet’s home and mortgage expert welcomed the increase in starts but said there’s a long journey ahead before supply matches demand.
"Home buyers will be glad this summer, when construction on many of those houses will be completed and they’ll be available for sale,” he said. “We face a shortage of affordable housing in most major metropolitan areas. We need years of strong housing starts before demand will be satisfied."
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