Dive Brief:
- December housing starts for single-family homes and apartments dipped 2.5% from November to a seasonally adjusted annual rate of 1.15 million, the Commerce Department reported, a decline, which came as a surprise to economists. Single-family starts, which represent two-thirds of the residential market, fell 3.3%, while multifamily fell 1%.
- December building permits also fell 3.9% to 1.23 million from November. Permits, an indicator of future building activity, are still at approximately half their 2005 peak, The Wall Street Journal reported.
- The Commerce Department report also reflected a variation in seasonally adjusted housing starts according to region, with an increase n the Northeast (24.4%) but declines in the Midwest (12.4%), South (3.3%) and West (7.6%). The Northeast and South were the only regions to post housing start gains for 2015 as a whole.
Dive Insight:
Because of the unseasonably warm December weather, and the addition of 45,000 construction jobs in December, general industry consensus was that housing starts would increase, The Journal reported. The decline in starts is especially disappointing given that November saw a 10.5% increase. Further, October and November also saw the addition of tens of thousands of construction jobs leaving industry experts to try to match those statistics up with this month's fewer starts.
As far as new home sales, they rose in November and October, but existing homes sales declined because of the difficulties in overcoming the mortgage process and a dwindling inventory.
Despite December's disappointing starts, the latest National Association of Home Builders/Wells Fargo Housing Market Index showed builder confidence in December holding steady with little variation during the last several months, which the NAHB says confirms a slow, steady growth in the industry. The NAHB report comes in advance of new home sales and existing home sales reports, which are set to be released later this month.
