Housing construction continued to improve in December as the nation’s homebuilders increased their building efforts nationwide, sending the unadjusted pace to a 13-year high.
According to the Department of Housing and Urban Development and the Department of Commerce, housing starts spiked 16.9% in December to a seasonally adjusted annual rate of 1.608 million and the pace for November was revised upward.
“Today’s housing numbers not only confirm the home building revival this year, but they double down on its magnitude,” said Robert Frick, Navy Federal Credit Union’s corporate economist. “Not only will homebuyers desperate for inventory see their choices rise, but housing should start contributing noticeably to GDP.”
In December, single-family starts grew 11.2% from November to 1.055 million units while multifamily starts grew a whopping 32% to 536,000 units, according to the report.
Permits rose 3.9% to a seasonally adjusted annual rate of 1.474 million, which is 5.8% above the December 2018 rate of 1.339 million. Single-family permits increased 0.5% to 916,000 while multifamily permits fell 11.1% to 458,000.
During the month, single-family completions rose 0.7% to 912,000, while multifamily completions increased 19.4% to 357,000.
Although housing starts increased significantly in December, Mike Fratantoni, the Mortgage Bankers Association’s chief economist, warns the pace is likely to slow in the months ahead.
“On a seasonally adjusted basis, housing starts jumped in December to their highest level in 13 years,” Fratantoni said. “Surprisingly, single-family starts increased relative to November even on an unadjusted basis – unusual at this time of year – and was driven by a rise in the South.”
“While single-family permits are up almost 11% relative to last year, the level suggests that this jump in starts is unlikely to persist, and we would expect them to return back below 1 million this spring,” he said.