Housing starts increased 5.8 percent to a seasonally adjusted annual rate of 1.67 million units, according to the latest report from the Commerce Department. While housing starts ended 2020 on a strong note, there are still concerns surrounding rising lumber prices, as well as increasing regulatory cost concerns that may impact future production.
Housing Starts: 1,669,000 (+5.8% month-over-month, +5.2% year-over-year)
Multifamily Starts: 312,000
Single-Family Starts: 1,338,000
Building Permits: 1,709,000 (+4.5% month-over-month, +17.3% year-over-year)
Multifamily Permits: 437,000
Single-Family Permits: 1,226,000
Completions: 1,417,000 (+15.9% month-over-month, +8.0% year-over-year)
Multifamily Completions: 422,000
Single-Family Completions: 984,000
Regional Year-to-Date Data
Midwest: +13.2 percent
West: +6.2 percent
Northeast: -2.8 percent
What the Industry Is Saying:
“Home construction finished the year with the biggest bang since 2006 with 1.669 million units started for construction in December (annualized). That means the worst of the housing shortage could soon come to an end. More inventory is clearly needed to lessen the heat of multiple offers and the consequent frustration of multiple losing bids.
“Homebuilders rightly favored single-family units over multifamily condominiums and apartments. Single-family units started at 1.338 million were 28 percent above one year ago, while multifamily units of 331,000 were 39 percent lower. Consumers, in light of the pandemic and work-from-home flexibility, have shown a preference for larger-sized homes.
“For 13 straight years prior, homebuilders have been underproducing below historic norms. Therefore, it will take robust home construction this year and next, at a minimum, to fully supply the market to properly meet the demand. More construction also means more local job creation. The housing sector looks to lead the economy in recovery in 2021.” — Dr. Lawrence Yun, National Association of REALTORS® Chief Economist
“After a hot streak of construction in the latter half of last year, the momentum could not be slowed down. There is a lot of positive energy in the market evidenced by intense demand to own a home that will continue to lift housing into 2021.” — Bill Banfield, Rocket Mortgage Executive Vice President of Capital Markets
“Builder concerns about a changing regulatory landscape may have triggered many to move up their plans to pull permits and put shovels to the ground. Our latest builder sentiment survey suggests somewhat softer numbers ahead due to rising building costs and an uncertain regulatory climate.” — Chuck Fowke, Chairman of the National Association of Home Builders (NAHB)
“The 1.34 million single-family starts pace in December is the highest since September 2006. And while NAHB is forecasting further production increases in 2021, the gains will tempered by ongoing supply-side challenges related to material costs and delivery times, a dearth of buildable lots and regional labor shortages that continue to exacerbate affordability woes.” — NAHB Chief Economist Robert Dietz
“The pace of housing construction ended 2020 on a strong note, providing much-needed housing supply to a tight market seeing record-low levels of inventory and rapidly-rising home prices. Total starts increased 7.9 percent to an annual pace of 1.67 million units in December, making last year the strongest for residential construction since 2006.
“Consistent with the final eight months of the year, December saw a 12 percent increase in single-family starts—a strong rebound from the sudden halt homebuilders endured during the onset of the pandemic. Homebuilders have since raised production to meet the additional demand from households looking for newer and larger homes in less dense markets. Additionally, single-family permits continued to increase last month, which is an indication that there is room for additional growth in new supply in the coming months.” — Joel Kan, AVP of Economic and Industry Forecasting, Mortgage Bankers Association