Housing starts in December jumped 15.8% above November’s rate for a seasonally adjusted annual rate of nearly 1.5 million units. However, December’s annual housing start rate was still down 4.4% from December 2023, according to the U.S. Census Bureau. It was one more sign of a possible slowdown in housing construction going into 2025.
Housing completions and the number of new housing units permitted decreased year over year in December. Housing completions fell to an annual rate of 1.54 million, 4.8% below November’s revised rate and 0.8% below the rate in December 2023 of 1.56 million units.
Single-family housing completions in December were at a rate of 948,000; 7.4% below the November revised rate of 1.02 million. The December rate of units in buildings with five units or more was at 570,000.
The number of new housing units permitted in December fell 0.7% from November’s rate to a seasonally adjusted annual rate of 1.48 million. December’s rate of permitted units was 3.1% below December 2023’s annual rate of 1.53 million.
Single-family authorizations in December were at an annual rate of 992,000, an increase of 1.6% from November’s figure of 976,000. Permits for units in buildings with five or more units were at a rate of 437,000 in December.
First American Financial Corporation Chief Economist Mark Flemming said December’s housing numbers continue to show that the industry is struggling to build enough new homes. But this is a long-term problem that has been going on for decades. He says the key to fixing the affordability crisis is for construction to ramp up.
“New-home sales are now 16% higher than the pre-pandemic average, but we are currently still only building about 10 [units] per 1,000 households, which is about the same [pace] as in 1991. New construction has struggled to keep up with demand. Rising construction costs, zoning restrictions, and a shortage of labor have all contributed to the inability to build enough homes,” Fleming said. “To put this pace in perspective, in the late 1930s and early 1940s, we were building between 500,000 and 700,000 units a year, which equated to 15-20 units per 1,000 households. Post-World War II, that ramped up to over a million units, peaking at 1.9 million units per year in 1950, or 44 units per 1,000 households. We have never built at this rate since.”