Single-Family Housing Starts Fall 8.6% in December

(Chart courtesy of Census Bureau/HUD)

Single-family housing starts fell 8.6% in December to 1.03 million, the U.S. Census Bureau and HUD announced Thursday. 

December’s single-family housing starts remain 16% higher than one year ago.

“While monthly housing starts data can oscillate a lot, the general trend we are looking for is an increase in starts, particularly for single-family homes,” said CoreLogic Chief Economist Selma Hepp. She noted an increase in building permits over the course of 2023 and a more positive housing outlook for 2024 due to lower mortgage rates and said homebuilders are “cautiously optimistic” about building new homes.

Earlier this week the National Association of Home Builders/Wells Fargo Housing Market Index reported that home builder confidence in the market for newly built homes climbed seven points to 44. This second consecutive monthly increase in builder confidence closely tracks with a period of falling interest rates, NAHB and Wells Fargo noted.

First American Deputy Chief Economist Odeta Kushi noted single-family permits, a leading indicator of future starts, reached their highest level since May 2022. She added that single-family completions increased 8.4% compared with November and 6.1% from one year ago. “That’s more supply added to the housing stock–good news for a housing market in need of more homes,” she said.

“The jump in single-family permits and the upward trend in single-family housing starts alongside improving builder sentiment is an encouraging sign for the housing market,” Kushi said. “While headwinds remain, notably ongoing affordability constraints, the green shoots of a housing recovery have emerged alongside lower mortgage rates.”