US residential housing starts climbed by 5.8% in December, continuing a four-month run of growth. US home construction is now at its best pace since late 2006, driven by strong demand for single-family housing.
The 5.8% climb to a 1.67 million annualized rate has topped all estimates made by a Bloomberg survey of economists.
“Consistent with the final eight months of the year, December saw a 12% increase in single-family starts – a strong rebound from the sudden halt homebuilders endured during the onset of the pandemic,” said Joel Kan, AVP of economic and industry forecasting at the MBA. “Homebuilders have since raised production to meet the additional demand from households looking for newer and larger homes in less dense markets. Additionally, single-family permits continued to increase last month, which is an indication that there is room for additional growth in new supply in the coming months.”
Housing completions in December hit a seasonally adjusted rate of 1,471,000, 15.9% above the revised November estimate and 8.0% above the December 2019 rate.
Economists have noted new home construction as a crucial indicator of housing market performance this year as low rates and millennial homebuyers drive skyrocketing demand. To keep price appreciation in check, new home supply is crucial.
“Housing starts have recovered and were at their strongest pace in more than 14 years. Amazing, considering the COVID-related downturn in the spring,” said Holden Lewis, home and mortgage expert at NerdWallet. “There aren’t enough homes in this country to go around, and we need a long-lasting surge of construction to meet demand. The upward trend in housing starts is a promising start.”