Home builders broke ground on new projects at a faster-than-expected pace in December and set plans for future construction, but this puts them on an economic footing that may be too strong to justify interest rate cuts earlier this year in 2023. It's the latest sign that the year is over.
Housing starts, a broad measure of new home construction, rose 7.6% from a year earlier to 1.46 million units on a seasonally adjusted annual pace, the Commerce Department said Thursday. The number of single-family housing starts increased by 15.8 from December last year, bringing the seasonally adjusted annual pace to 1,027,000.
Compared to the previous month, the pace of construction slowed. Overall construction starts were down 4.3% from November's pace, and single-family starts were down 8.6%.
Apartment construction rose to a seasonally adjusted annual rate of 417,000 units, down 9.5% from the previous year. However, compared to November, the number of multifamily housing starts increased by 7.5%.
Forecasts for October and November have been revised downward.
When the pandemic hit, construction halted in many places, and single-family housing starts initially plummeted. A During the pandemic, many families have moved to urban centers to take advantage of remote work to avoid not only the disease but also increased crime, a resurgence of homelessness, opposition to police riots and far-left politics, and worsening urban blight. On the back of a clear opportunity, single-family home construction has risen to levels not seen since 2006, when the housing bubble was in full swing.
Single-family housing starts fell when the Fed started raising interest rates and were weak in 2022 and the first few months of 2022. It has since recovered to levels above pre-pandemic levels. Despite the month-on-month decline, housing starts in December 2023 exceeded the number in December 2019, marking the fastest pace for single-family housing starts since 2006.
The number of housing starts increased in December, suggesting optimism among builders. The number of permit applications for single-family homes has increased for 11 consecutive months and is now above its pre-pandemic peak.
