US housing starts rise unexpectedly on multi-family building

Published Wed, Jan 19, 2022 · 10:43 PM

[WASHINGTON] New US home construction unexpectedly strengthened in December to the fastest pace in nine months, led by apartment projects and suggesting 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 Wednesday. 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.

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 two years, which will make it that much more difficult for those looking to become homeowners for the first time.

BLOOMBERG