Housing Starts End Strong

Total housing starts posted a 5.8 percent increase in December (1.67 million units) compared to an upwardly revised November estimate of 1.58 million units according to the joint data release from the Census Bureau and HUD. Relative to December 2019, total starts are 5.2 percent above the annual pace of 1.59 million units.

Single-family starts posted a monthly increase of 12.0 percent to a strong seasonally adjusted annual rate of 1.34 million units, which is the highest pace since September 2006. The November annualized pace for single-family starts was revised up to 1.19 million units. The three-month moving average for single-family in December is an annual rate of 1.24 million units.

Single-family starts came in stronger than NAHB forecasted, as builders worked off some backlog due to sales made with construction having not yet started. However, given increases in materials concerns and rising concerns of regulatory costs in the environmental and labor areas, we do expect some softening in construction conditions in the months ahead. The two-month decline of the HMI is suggesting this as well.

Single-family permits, a useful indicator of future construction activity, was 7.8 percent higher at 1.23 million units annual pace in December compared to November and have registered a 30.4 percent gain compared to a year ago. This is in line with the current level of the NAHB/Wells Fargo Housing Market Index, which held builder confidence in the market for newly-built single-family homes at a solid level of 83 in January, albeit off the high of 90 in November.

Multifamily starts (2+ unit production) posted a decrease of 13.6 percent in December to a 331,000 annual rate compared to the previous month. On a year-over-year basis, multifamily unit production is down 38.7 percent. Multifamily permitting is also on a downward trend in December posting a 3.0 percent decline compared to the previous month and down 6.6 percent compared to a year ago.

Regional data show, on a year-over-year basis positive conditions for single-family construction in all the regions, West (+34.6 percent) and Midwest (+38.4 percent), South (22.9 percent) and Northeast (19.7 percent). —By

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