The numbers: U.S. home builders began building homes at a seasonal annual rate of 1.67 million in December, an increase of 5.8 percent from the previous month, the Bureau reported Thursday. of the United States Census.
New housing permits came at a seasonally adjusted annual rate of 1.71 million, 4.5% more than in November.
Compared to December 2019, housing initiatives increased by 5%, while permits increased by 17%. It was the beginning of higher level housing and building permits have been obtained since 2006.
Both figures exceeded analysts’ expectations, reflecting the growth of the single-family sector. Economists surveyed by MarketWatch expected housing to start producing at a rate of 1.56 million and building permits to enter at a rate of 1.61 million.
What happened: The growth of the single-family sector led to an increase in both housing initiatives and building permits. Monthly, single-family leave increased by 12%, while single-family leave increased by 7.8%. Comparatively, new construction of multi-family buildings fell 15.2% between November and December, while multi-family permits for buildings of five or more units fell 2%. Permits for duplex, triplex and quadplex fell 11.5%.
At the regional level, all parts of the country saw an increase in the activities they allowed, except the Northeast, where it fell by 7.2%. Although even in the Northeast, single-family permits increased monthly.
Similarly, the Northeast was the only region to experience a decline in housing initiatives, both in general and in the single-family sector. The Midwest experienced the highest growth in housing initiatives, with an increase of 32%.
The big picture: Demand among buyers could cool in the face of high house prices and lack of inventory, but it still remains high compared to last year. This gives builders a “strong incentive to continue building,” said Danielle Hale, chief economist at Realtor.com.
Overall, housing initiatives for 2020 increased by almost 12% compared to 2019, despite the slowdown last spring caused by the pandemic. Builders ’optimism may decline slightly as buyers slow down on foot traffic and the rising costs associated with buying land and materials. But there is still the underlying need for new homes, which should keep the construction sector busy for a while.
What they say: “New mortgage applications are also rising again, perhaps to advance to higher interest rates. Despite slow population growth, residential construction continues to be well supported by (so far) record low mortgage rates, light resale listings and the migration of teleworkers to the suburbs, ”wrote Michael Gregory, chief economist at BMO Capital Markets in a research note.
“The homes started have recovered and have been at their strongest pace in more than 14 years. Amazing, considering the COVID-related recession in the spring. There are not enough homes in this country to circulate, and we need a wave of sustainable construction to meet demand, ”said Holden Lewis, a home and mortgage expert at personal finance website NerdWallet.