December US housing starts rise unexpectedly on multi-family building
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NEW US home construction unexpectedly strengthened in December to the fastest pace in 9 months, led by apartment projects and suggesting that builders found some success navigating shortages of materials and labour.
Residential starts rose 1.4 per cent to a 1.70 million annualised rate from a 1.68 million pace in November, according to government data released on Wednesday (Jan 19).
The median estimate in a Bloomberg survey called for a 1.65 million pace.
Applications to build, a proxy for future construction, jumped 9.1 per cent to an annualised 1.87 million units in December, the highest since January of last year.
Home prices have surged over the last year as potential buyers compete for a very limited number of homes.
Builders are racing to replenish inventory, but supply chain challenges, high commodities prices and a lack of skilled workers have elongated construction timelines and inflated backlogs.
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Without enough finished homes to meet demand, housing affordability is poised to deteriorate further in 2022.
Mortgage rates now stand at the highest level in nearly 2 years, which will make it that much more difficult for those looking to become homeowners for the first time.
Multi-family starts - which tend to be volatile and include apartment buildings and condominiums - climbed 10.7 per cent to a 530,000 rate, the fastest since February 2020.
Single-family starts eased 2.3 per cent in December to an annualised pace of 1.17 million units, the government's report showed.
At the same time, applications to build one-family dwellings increased 2 per cent to the highest level since May.
Overall new home construction slumped nearly 14 per cent in the West and slipped 1.9 per cent in the South.
Starts advanced solidly in the North-east and Mid-west.
Looking ahead, the Omicron variant and the corresponding surge in Covid-19 cases could exacerbate the issues already faced by builders.
Homebuilding sentiment so far remains intact though with a gauge of builder confidence slipping just slightly in January.
The number of one-family housing units still under construction increased to the highest level in almost 15 years, extending a steady uptrend since June 2020. BLOOMBERG
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