The surge follows a 9.8% increase in Nov. Total housing starts for 2020 increased 7% compared to 2019, but builders voice concerns about “supply-side challenges.”
WASHINGTON – Led by a solid, double-digit gain in single-family starts, overall housing starts increased 5.8% to a seasonally adjusted annual rate of 1.67 million units in December, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
The December reading is the number of housing units builders would begin if development kept the same pace for the next 12 months.
Within that overall number, December’s single-family starts increased 12% (1.34 million seasonally adjusted annual rate), which the multifamily sector, which includes apartment buildings and condos, decreased 13.6% (331,000 pace).
For all of 2020, total housing starts were 1.38– a 7% gain over the 1.29 million in 2019. Single-family starts for the year were up 11.7% (991,000), and multifamily starts dropped 3.3% (389,000).
While housing starts ended the year on a strong note, the National Association of Home Builders (NAHB) issued a word of warning: Rising lumber prices and increasing regulatory cost concerns could affect future production. NAHB’s market index of builders’ attitudes found a slight drop in its latest numbers.
“Builder concerns about a changing regulatory landscape may have triggered many to move up their plans to pull permits and put shovels to the ground,” says Chuck Fowke, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Tampa. “Our latest builder sentiment survey suggests somewhat softer numbers ahead due to rising building costs and an uncertain regulatory climate.”
“The 1.34 million single-family starts pace in December is the highest since September 2006,” said NAHB Chief Economist Robert Dietz. “And while NAHB is forecasting further production increases in 2021, the gains will tempered by ongoing supply-side challenges related to material costs and delivery times, a dearth of buildable lots and regional labor shortages that continue to exacerbate affordability woes.”
In a year-to-year comparison for 2020 vs. 2019, combined single-family and multifamily starts were 13.2% higher in the Midwest, 7.5% higher in the South, 6.2% higher in the West and 2.8% lower in the Northeast.
Overall permits – a sign of future activity – increased 4.5% to a 1.71-million-unit annualized rate in December. Single-family permits increased 7.8% to a 1.23-million-unit rate. Multifamily permits decreased 3% to a 483,000 pace.
Permits were 7.4% higher in the Midwest, 7.3% higher in the South, 2.1% higher in the West and 5.2% lower in the Northeast.
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