Tuesday, September 29, 2020

U.S. housing starts surged last month to highest in 13 years

Jan 18. 2020
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By Syndication Washington Post, Bloomberg · Ana Monteiro

Groundbreakings on new U.S. homes surged in December to a 13-year high, giving the housing market momentum heading into the new year amid low mortgage rates, solid job growth and optimistic buyers and builders.

Residential starts rose 16.9% to a 1.61 million annualized rate after an upwardly revised 1.375 million pace in the prior month, according to government figures released Friday. The gain was the biggest in three years and well above all estimates in a Bloomberg survey. Permits, a proxy for future construction, fell 3.9% to 1.42 million.

Shares in homebuilding companies rose at the open of New York trading, with the index climbing to the highest since August 2005.

The data indicate residential construction added to fourth-quarter growth after contributing in the previous quarter for the first time since the end of 2017. While the spike may not be immediately sustained at these levels, demand has been fueled by mortgage rates near a three-year low as the job market remains resilient and wage gains help put money into the pockets of potential homebuyers.

Construction of single-family homes rose 11.2% to the highest since mid-2007, while permits for those dwellings decreased 0.5%. Groundbreakings for the multifamily category, which tends to be more volatile and includes apartment buildings and condominiums, jumped 29.8% to the highest since 1986.

The full-year gain was more subdued, as new-home construction rose 3.2% following 3.9% in 2018. Permits were up 3.9% in 2019.

Even so, the strong overall reading on starts corroborates a jump in developers' confidence. U.S. homebuilder sentiment posted the highest back-to-back readings since 1999 in December and January amid a jump in prospective buyers and a bump in the sales outlook.

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