Single-family housing starts dipped to a seasonally adjusted annual rate of 795,000 in December, according to new residential construction data released by the Commerce Department Friday morning. This month’s result marks a -4.0% decrease from November’s rate of 828,000, but represents a 3.9% gain compared to December 2015, when the estimate was 765,000.
All regions excluding the South experienced a month-over-month increase in 1-unit housing starts. Starts increased most significantly in the West, rising 2.8% from November levels and 17.0% year-over-year. Despite the scant -0.5% decrease in the South month-over-month, 183,000 new homes were started in the region, a still-healthy rate.
Total housing permits, the leading indicator for future starts, fell -0.2% in November, due to a big dip in multifamily permits for 5-unit or more structures, which fell -10.1% month-over-month. Single-family permits rose 4.7%, indicating that next month’s report will post gains in starts. Permits issued for 1-unit structures increased 6.6% in the South, and 5.8% in the West, while the Northeast remained unchanged. The Midwest was the only region where permitting for 1-unit structure declined, falling a scant -0.8%.
Total privately-owned housing completions fell -7.9% in December to a seasonally adjusted annual rate of 1,123,000, also primarily due to a large dip in the multifamily sector. However, completions of both single-family and multi-family housing decreased, by -0.9% and -19.3%, respectively.
Lawrence Yun, chief economist for the National Association of Realtors, saw a mixed picture in the data. “Let’s hope the rising trend in new home construction continues throughout 2017. As evidenced by the brisk pace of rent and home-price growth, the country desperately needs more housing units. Aside from providing consumers with more choices, the increased construction also brings added benefit of boosting economic growth and job creation. Ideally, housing starts should be in the range of 1.5 to 1.6 million.”
He added, “Good news today on trend, but still far from the goal.”
Read the full release from the Commerce Department here>>
