The latest U.S. Census Bureau report on home construction revealed that housing starts in December were at a seasonally adjusted annual rate of 1.608 million — a massive 16.9% jump from the previous month.
That rate is also a whopping 40.8% above the December 2018 rate of 1,142,000 as builders ramp up their operations to keep up with demand.
“On a seasonally adjusted basis, housing starts jumped in December to their highest level in 13 years,” said Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association. “Surprisingly, single-family starts increased relative to November even on an unadjusted basis – unusual at this time of year – and was driven by a rise in the South.”
Single-family starts came at a rate of 1,055,000, an 11% gain from the prior month.
November’s numbers also got a dash of good news, with the month’s overall estimate revised upward to 1.375 million housing starts, an increase of 10,000 from the initially reported figure.
The number of housing starts for the whole year also saw improvement from the year prior. An estimated 1,289,900 housing units were started in 2019, up 3.2% above 2018’s estimate of 1,249,900.
Meanwhile, housing permits in December came at a seasonally adjusted annual rate of 1,416,000, down 3.9% month to month but up 5.8% year to year. Single-family permits in December were at a rate of 916,000, down 0.5% from November’s revised figure, though substantially up annually. For all of 2019, an estimated 1,368,800 housing permits were authorized, 3.9% more than 2018.
Despite the massive surge — or, possibly, because of its magnitude — in starts, Fratantoni cautions that its level may be unsustainable, although he is encouraged by the growth.
“While single-family permits are up almost 11 percent relative to last year, the level suggests that this jump in starts is unlikely to persist, and we would expect them to return back below 1 million this spring,” he said. “However, the trend in activity remains quite positive, and as more units are completed, inventories will grow, and this will support a faster pace of home sales in the spring of 2020.”