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2013 Housing Starts Notch 6-Year High

Monday, January 20, 2014

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After a rollercoaster finish to the year, total U.S. home construction and permits ended 2013 at their highest annual levels since 2007, the U.S. Commerce Department reported Friday (Jan. 17).

Coming off of a five-year high in November, nationwide housing starts dropped 9.8 percent in December and building permits fell 3 percent, the federal government reports.

Economists call the signs of recovery encouraging, but builders remain cautious.

Starts Ease

Builders broke ground in December on single-family homes and apartment buildings at a seasonally adjusted annual rate of 999,000 units, following a revised November pace of 1.11 million units—the strongest level since February 2008.

NAHB
NAHB

In December, home builders started 999,000 units, a 9.8 percent decline from November. However, the level beat economists' forecasts for the month.

“Total housing starts of just under 1 million units in December was the third-highest monthly level of production in 2013,” Rick Judson, chairman of the National Association of Home Builders (NAHB), said in a statement.

“This rate is in line with our builder surveys, and tells us we are seeing a return to trend after a strong November.”

December's single-family starts fell 7 percent below November’s rate to 667,000, while multi-family starts took a 17.9 percent hit, reaching only 312,000 units.

For 2013 overall, however, the Commerce Department estimated housing starts at 923,400 units—the highest annual total since 2007 and 18.3 percent above the 2012 figure of 780,600.

Permits Dip

Permit issuance, which can be an indicator of future building activity, reached 974,700 units in 2013—17.5 percent above 2012 figures and a rate not seen since 2007.

For December, permits fell to an annual rate of 986,000, from a revised November rate of 1.02 million.

December's single-family authorizations were at a rate of 610,000, a 4.8 percent drop from November. Multi-family permits dropped 0.6 percent, to 350,000, in December.

Completions Rise

An estimated 762,200 housing units were completed in 2013, the government said—17.4 percent more than the 649,200 completions reported in 2012.

In December, single-family and multi-family housing completions dipped to a seasonally adjusted rate of 744,000—10.8 percent below November levels, but 10.7 percent above the December 2012 rate.

Builder Confidence is 'Level'

Despite the 2013 bounce, home builders remain cautious in the new year.

Housing Starts
NAHB Blog / U.S. Census Bureau

Housing starts reached 923,400 units in 2013, the highest annual total since 2007 and 18.3 percent above the 2012 figure.

The National Association of Home Builders has reported a slight drop in builder confidence in the market. The NAHB/Wells Fargo Housing Market Index was 56 in January, 1 point below the revised December reading. Any number over 50 indicates that more builders view conditions as good than poor.

“Builder confidence has essentially leveled out and is holding at a solid level,” said Judson.

Looking Ahead

NAHB Chief Economist David Crowe anticipates another good year for home building, but notes persistent factors that are impeding the overall pace of recovery.

“Rising home prices, historically low mortgage rates, and significant pent-up demand will drive a continuing, gradual recovery in the year ahead,” Crowe said. 

“However, the pace of the recovery could be stronger were it not for rising construction costs and inaccurate appraisals that are keeping some home sales from going through.”

   

Tagged categories: Construction; Economy; Government; Housing; Housing starts; Residential Construction; Residential contractors

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