Photographer: David Paul Morris/Bloomberg

Housing Starts in U.S. Rose More Than Forecast in December

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Builders broke ground on more U.S. homes than forecast in December as a jump in apartment construction helped cap the seventh straight yearly increase, a report from the Commerce Department showed Thursday.

Key Points

  • Starts rose 11.3 percent to a 1.23 million annualized rate (forecast was 1.19 million) from a revised 1.10 million pace
  • Permits, a proxy for future construction, decreased 0.2 percent to a 1.21 million annualized rate (forecast was 1.23 million)
  • Single-family starts declined 4 percent to 795,000 rate, while multifamily construction jumped 57.3 percent to 431,000

Big Picture

Residential construction ended the year on a stronger note, a sign the industry will continue to be in a steady recovery. Even with a recent pickup in mortgage rates, borrowing costs remain attractive for those who qualify for a mortgage, and the job market is still solid. While faster growth in construction is impeded by a shortage of skilled workers and available ready-to-build lots, builder confidence is close to an 11-year high on optimism President-elect Donald Trump and the new Congress will ease regulations.

The Details

  • Permits for single-family homes rose 4.7 percent in December and multifamily permits declined 9 percent
  • Starts rose from prior month in three of four U.S. regions, led by the Midwest; construction in the South declined
  • Wide range for error, with a 90 percent chance that December increase in total housing starts ranged from 0.9 percent to 21.7 percent
  • For all of 2016, there were 1.17 million starts, up from 1.11 million in the prior year and the most since 2007