The numbers: U.S. homeowners began building homes with a seasonally adjusted annual rate of $ 1.67 million in December, an increase of 5.8% from the previous month, the U.S. Census Bureau reported Thursday.
The approval for new homes took place at a seasonally adjusted annual rate of 1.71 million, 4.5% higher than in November.
Compared to December 2019, the start of housing increased by 5%, while permits increased by 17%. This was the highest level of housing commencement and building permits have been reached since 2006.
Both figures are above analysts’ expectations, reflecting growth in the single-family sector. Economists surveyed by MarketWatch expected that housing would take place at a rate of 1.56 million and that building permits would come in at a rate of 1.61 million.
What happened: The growth in the single-family sector has led to an increase in both housing and building permits. On a monthly basis, the start-up of single families increased by 12%, while permits for single families increased by 7.8%. Comparatively, the new construction of multi-family buildings decreased by 15.2% between November and December, while multi-family permits for buildings with five or more units decreased by 2%. Permits for duplexes, triplexes and quadplexes decreased by 11.5%.
On a regional basis, permissible activity increased in all parts of the country except in the northeast, where it decreased by 7.2%. Although even in the northeast monthly allowances for single families were greater.
Similarly, the northeast was the only region to see a decline in housing starts – as well as the single-family sector. The Midwest started the biggest growth in homes, with a 32% increase.
The whole picture: Demand among buyers may decline in light of high house prices and a lack of inventory, but it remains high compared to last year. This gives builders a strong incentive to keep building, ‘says Danielle Hale, chief economist at Realtor.com.
Overall, housing starts for 2020 have risen by almost 12% from 2019, despite the slowdown caused by the pandemic this past spring. Builders’ optimism may decline slightly in light of the slowdown in foot traffic of buyers and rising costs associated with the purchase of land and materials. But the underlying need for new homes is still there, which will keep the construction sector busy for some time to come.
What they say: ‘New mortgage applications are also rising again, perhaps to get higher interest rates. Despite slow population growth, residential construction remains well supported by (so far) record low mortgage rates, record lean resale lists and the migration of teleworkers to the suburbs, ‘writes Michael Gregory, deputy chief economist at BMO Capital Markets. in a research note.
“The beginnings of housing have recovered and have been at their strongest pace in more than 14 years. Incredible, considering the COVID-related slump in the spring. There are not enough homes in this country to move around, and we need a sustained increase in construction to meet the demand, ‘said Holden Lewis, home and mortgage expert at the NerdWallet website for personal finance.