US single-family housing starts plunge in December

Single-family housing starts, which account for the bulk of homebuilding, fall 8.6 per cent to a seasonally adjusted annual rate of 1.027 million units last month. PHOTO: REUTERS

Published Thu, Jan 18, 2024 · 10:14 PM

US SINGLE-FAMILY homebuilding dropped sharply in December after a string of strong gains, but new construction remains underpinned by a shortage of previously owned houses for sale.

Single-family housing starts, which account for the bulk of homebuilding, fell 8.6 per cent to a seasonally adjusted annual rate of 1.027 million units last month, the Commerce Department’s Census Bureau said on Thursday (Jan 18).

Data for November was revised lower to show single-family starts rising to a rate of 1.124 million units instead of the previously reported 1.143 million units.

Rainy weather last month likely contributed to the plunge in homebuilding. Single-family starts increased 15.8 per cent on a year-on-year basis in December. Single-family homebuilding fell in the Northeast, Midwest and the densely populated South, but rose in the West.

A survey from the National Association of Home Builders (NAHB) on Wednesday showed confidence among single-family builders improved sharply in January. That occurred as the rate on the popular 30-year fixed mortgage retreated further to around 6.66 per cent after peaking at a 23-year high of 7.79 per cent in late October, according to data from mortgage finance agency Freddie Mac.

The NAHB survey showed the share of builders reporting cutting home prices in January was the smallest in five months.

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Permits for future construction of single-family homes increased 1.7 per cent to a pace of 994,000 units last month. The housing market has been pressured by higher borrowing costs and a perennial inventory shortage, which have constrained sales of previously owned homes. But demand for new construction is boosting residential investment, which rebounded in the third quarter after nine straight quarterly decreases.

Starts for housing projects with five units or more increased 7.5 per cent to a rate of 417,000 units in December.

Overall housing starts fell 4.3 per cent to a rate of 1.460 million units in December. Economists polled by Reuters had forecast starts would fall to a rate of 1.426 million units from the previously reported 1.560 million units.