U.S. Housing Starts Skyrocket To Ten-Month High In December

(RTTNews) - A report released by the Commerce Department on Friday showed new residential construction in the U.S. surged by much more than anticipated in the month of December.

The Commerce Department said housing starts soared by 15.8 percent to an annual rate of 1.499 million in December after tumbling by 3.7 percent to a revised rate of 1.294 million in November.

Economists had expected housing starts to jump by 2.4 percent to an annual rate of 1.320 million from the 1.289 million originally reported for the previous month.

With the much bigger than expected increase, housing starts reached their highs level since hitting an annual rate of 1.546 million last February.

The spike by housing starts came amid a substantial rebound by multi-family starts, which skyrocketed by 61.5 percent to an annual rate of 449,000 in December after plummeting by 30.7 percent to an annual rate of 278,000 in November.

Single-family starts also shot up by 3.3 percent to an annual rate of 1.050 million in December after surging by 7.7 percent to an annual rate of 1.016 million in November.

"Home builders closed 2024 with a bang following several months of more tepid paces of home construction," said Nationwide Economist Daniel Vielhaber. "This pickup in construction activity jibes with what had been climbing expectations from builders for sales over the next six months."

He added, "However, it should be noted that sales expectations have diminished since then due to what are now expected to be higher-for-longer interest rates."

Meanwhile, the report said building permits slid by 0.7 percent to an annual rate of 1.483 million in December after surging by 5.2 percent to a revised rate of 1.493 million in November.

Building permits, an indicator of future housing demand, were expected to slump by 3.0 percent to an annual rate of 1.460 million from the 1.505 million originally reported for the previous month.

The decrease by building permits came amid a pullback by multi-family permits, which tumbled by 5.0 percent to an annual rate of 491,000 after spiking by 15.4 percent to an annual rate of 517,000 in November.

Single-family permits, on the other hand, jumped by 1.6 percent to an annual rate of 992,000 in December after climbing by 0.5 percent to an annual rate of 976,000 in November.

The National Association of Home Builders released a separate report on Thursday unexpectedly showing a modest improvement by U.S. homebuilder confidence in the month of January.

The report said the NAHB/Wells Fargo Housing Market Index crept up to 47 in January from 46 in December. Economists had expected the index to edge down to 45.

With the unexpected uptick, the housing market index reached its highest level since hitting 51 in April 2024.