Housing starts during December were at a seasonally adjusted annual rate of 1.702 million units, a surprising figure that exceeded expectations and closed the year on a high note.
Starts, jointly reported by the U.S. Census Bureau and the Department of Housing and Urban Development, were up 1.4% monthly and 2.5% yearly to reach the highest level since March. Economists polled by Reuters had actually projected a drop in construction from the revised November pace of 1.678 million units to 1.650 million units.
Single-family housing starts came in at a rate of 1.172 million, down 2.3% month over month, though the pace remained a robust one. The good news for the single-family segment came via significant upward revisions for October and November. December’s jump came via multifamily building, which was up 13.7% from November to a rate of 524,000 units.
Milder than usual weather during December — the month was the warmest December ever recorded by the National Centers for Environmental Information — aided builders, particularly in the Midwest and Northeast, allowing work to commence on more projects than usual.
With December in the books, preliminary residential construction data is now available for full-year 2021, with a total of 1.595 million housing starts for the 12-month period. If that figure holds, it would mark a 15.6% gain over the 1.38-million-unit total from 2020.
Notably, even with December’s drop, the preliminary figure for single-family starts for full-year 2021 came to 1.123 million units, up 13.4% from the year prior and the most single-family starts since 2006. Multifamily saw an even bigger building 2021, with the 472,000-unit preliminary start total registering as the sector’s best construction year since 1987.
Moving forward, experts expect the climb in single-family building to subdue, though multifamily could be in for another construction increase in 2022.
“The double-digit gain for single-family starts in 2021 was a continuation of the rebound and expansion of home building that took place in the wake of the pandemic,” said Robert Dietz, chief economist for the National Association of Home Builders. “However, as mortgage interest rates are rising and construction costs increase, affordability headwinds are steepening. NAHB’s outlook for 2022 calls for relatively flat conditions for single-family construction, with additional gains for multifamily and remodeling.”