The Commerce Department found housing starts declined in December after a November spike. Building permits picked up, signaling upward construction growth.
WASHINGTON – After reporting a sharp increase in new residential construction in the U.S. in the previous month, the Commerce Department released a report on Thursday showing a notable pullback by housing starts in the month of December.
The Commerce Department said housing starts slumped by 4.3% to an annual rate of 1.460 million in December after spiking by 10.8% to a revised rate of 1.525 million in November.
Economists had expected housing starts to pull back by 8.6% to a rate of 1.426 million from the 1.560 million originally reported for the previous month.
Single-family housing starts led the pullback, tumbling by 8.6% to a rate of 1.027 million in December after soaring by 15.4% to a rate of 1.124 million in November.
Meanwhile, multi-family housing starts surged by 8.0% to a rate of 433,000 in December after slipping by 0.3% to a rate of 401,000 in November.
“Housing starts fell in December but remained solid as demand for new builds maintains a high floor amid a persistent extreme shortage of housing inventory,” said Nationwide Economist Daniel Vielhaber.
He added, “With a substantial move downward in mortgage rates still a ways off, this dynamic is expected to remain through the early months of 2024.”
The report also said building permits surged by 1.9% to an annual rate of 1.495 million in December after tumbling by 2.1% to a revised rate of 1.467 million in November.
Building permits, an indicator of future housing demand, were expected to jump by 1.4% to a rate of 1.480 million from the 1.460 million originally reported for the previous month.
Single-family permits shot up by 1.9% to a rate of 994,000, while multi-family permits jumped by 2.2% to a rate of 501,000.
The National Association of Home Builders released a separate report on Wednesday showing a significant improvement in U.S. homebuilder confidence in the month of January.
The report said the NAHB/Wells Fargo Housing Market Index jumped to 44 in January from 37 in December. Economists had expected the index to rise to 39.
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