Housing Starts Finish Year Down
Housing starts fell by 8.2 percent to finish the year, HUD and the Census Bureau reported yesterday.
The report said housing starts came in at a seasonally adjusted annual rate of 1.192 million in December, 8.2 percent below the revised November estimate of 1.299 million and 6.0 percent a year ago (1.268 million). Single-family housing starts fell by nearly 12 percent to 836,000 from November’s revised 948,000. The December rate for units in buildings with five units or more was 352,000.
HUD/Census estimated 1.202 million housing units started in 2017, 2.4 higher than a year ago (1.173 million).
Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., noted starts had surged in November due to unseasonably mild weather and some bounce back from hurricane disruptions and said housing starts appear poised for a “solid” year.
“December’s 8.2 percent pullback in housing starts appears to be nothing more than the typical winter volatility,” Vitner said. “Residential construction tends to pull back as winter approaches, so anything outside the norm tends to have a disproportionate impact on the reported figures.”
Mark Fleming, chief economist with First American, Santa Ana, Calif., said growth in residential construction jobs supports further improvement in the pace of home building because building a home does not readily lend itself to outsourcing and automation. “However, builders broke ground on fewer homes this month in comparison to last,” he noted. “Despite this drop, the increase in completions signals some relief for the supply shortage. In addition, the annual increase in permits, in conjunction with the rise in employment, signals an upward trajectory for housing starts in 2018.”
The report said privately owned housing units authorized by building permits in December fell to 1.302 million in December, 0.1 percent below the revised November rate of 1.303 million but 2.8 percent higher than a year ago (1.266 million). Single-family authorizations in December rose to 881,000; 1.8 percent higher than November (865,000). Authorizations of units in buildings with five units or more came in at 382,000 in December.
HUD/Census estimated 1.263 million housing permits in 2017, 4.7 percent higher than a year ago (1.206 million).
“The strength in permits relative to starts suggests home building will ramp up once the weather warms up,” Vitner said. “The late-year surge in multifamily permits suggests we may see more strength than that. Apartment construction may catch a second wind in 2018, after slipping this past year. Interest in condominium development also seems to be perking up.”
The report said privately owned housing completions in December came in at 1.177 million, 2.2 percent higher than November (1.152 million) and 7.4 percent higher than a year ago (1.096 million). Single-family housing completions in December totaled 818,000; 4.3 percent higher than November’s 784,000. The December rate for units in buildings with five units or more was 346,000.
HUD/Census estimated 1.152 million housing units completed in 2017, 8.7 percent higher than a year ago (1.059 million).
“The annual amount of completions necessary just to keep pace with growing millennial demand and eliminate the housing shortage is estimated at around 1.5 million units,” Fleming said. “We are just falling short.”
