Housing starts for the month of December took a tumble, according to the latest report from the U.S. Dept. of Housing and Urban Development and the U.S. Dept. of Commerce.
Housing starts fell 11.2% in December 2018 to a seasonally adjusted annual rate of 1.08 million units, according to the report, which was delayed due to the more than month-long partial government shutdown.
Single-family production declined 6.7% from last month to 758,000 units while multifamily starts fell 20.4% from last month to a seasonally adjusted annual rate of 302,000 units.
Despite the monthly loss, both single-family and multifamily starts posted an annual gain. Single-family production increased 2.8% in 2018 to a rate of 872,800. Multifamily starts posted 5.5% growth in 2018 to 373,700 units.
What does this mean for the new year? Expect starts to slow and level off, especially in terms of single-family production, according to one economist.
"Looking ahead, we expect single-family production will be relatively flat in 2019 and multifamily starts will level off as well," said Robert Dietz, chief economist for the National Association of Home Builders. "The biggest challenge facing builders this year will be ongoing housing affordability concerns as they continue to grapple with a shortage of construction workers, a lack of buildable lots and excessive regulatory burdens."
One area that may warm up over the next year is multifamily rentals, according to Trulia Chief Economist Issi Romem.
“Building permit numbers fell nationally for single-family homes, but increased for multifamily,” Romem said. “While the former are built mostly for sale, the latter are built mostly for rent. The latest numbers, driven by the South and the West in which most new construction takes place, suggest that while the for-sale market cooled off, the multifamily rental market may be starting to gear up again.”
Overall permits increased 0.3% in December to a seasonally adjusted annual rate of 1.33 million.
Single-family authorizations saw a monthly decrease of 2.2% to a rate of 829,000 permits and multifamily permits jumped 4.9% to an annualized rate of 460,000.