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Housing starts down 11.2 per cent in December

Housing starts fell 11.2 per cent in December to a seasonally adjusted annual rate of 1.08 million units, according to a report from the U.S. Department of Housing and Urban Development and the Commerce Department that was delayed due to the partial government shutdown. Multifamily starts fell 20.4 per cent to a seasonally adjusted annual rate of 320,000 units while single-family production posted a 6.7 per cent decline to 758,000 units.

However, single-family and multifamily starts each posted a yearly gain. Single-family production was up 2.8 per cent in 2018 to a rate of 872,800, the highest annual figure since the Great Recession. Multifamily starts posted a 5.5 per cent gain in 2018 to 373,700 units.

“Looking back, the December drop in housing production correlated with the peak increase in mortgage rates and corresponding decline in builder sentiment,” said National Association of Home Builders (NAHB) Chairman Greg Ugalde, a home builder and developer from Torrington, Conn. “During that time, builders adopted a cautious wait-and-see approach as demonstrated in the rise of single-family and multifamily units that were permitted but not under construction.”

“Looking ahead, we expect single-family production will be relatively flat in 2019 and multifamily starts will level off as well,” said NAHB Chief Economist Robert Dietz. “The biggest challenge facing builders this year will be ongoing housing affordability concerns as they continue to grapple with a shortage of construction workers, a lack of buildable lots and excessive regulatory burdens.”

Overall permits – which are an indicator of future housing production – inched up 0.3 per cent in December to a seasonally adjusted annual rate of 1.33 million. Single-family permits fell 2.2 per cent to an 829,000 unit pace in December while multifamily permits increased 4.9 per cent to an annualized rate of 497,000.

For 2018, single-family permits posted a 4 per cent gain of 852,700 over the previous year while multifamily permits edged down 0.9 per cent to 458,000.

Regionally in December, combined single-family and multifamily housing starts were unchanged in the Northeast. Starts fell 26.3 per cent in the West, 13.2 per cent in the Midwest and 6 per cent in the South.

Overall permit issuance in December rose 17.1 per cent in the West. Permits were down 6 per cent in the Northeast, 17.6 per cent in the Midwest and 2 per cent in the South.