Residential construction saw a 5.8% increase in home starts in December over the previous month, putting the seasonally adjusted annual rate at 1.67 million homes. Compared with 2019, home starts were up 17%, the highest level since 2006, before the burst of housing bubble.
Starts for single-family homes made up most of the increase, at 12%. New construction on multi-family dwellings dropped 15.2% between November and December. Permits for duplexes, triplexes, and quadplexes dropped 11.5%.
The Northeast rated lowest, losing 7%, while the Midwest grew a whopping 32%.
“Rapid growth continues due to extremely high buyer demand,” said Danielle Hale, chief economist at Realtor.com. “There is some expected slowdown as there is a rising cost in purchasing land and materials, but the underlying need for homes is still there.”
“New mortgage applications are also rising again, perhaps to get ahead of higher interest rates. Despite slow population growth, residential construction remains well-supported by (so far) record-low mortgage rates, record-lean resale listings, and the migration of teleworkers to the suburbs,” Michael Gregory, deputy chief economist at BMO Capital Markets, wrote in a report to MarketWatch.
“Housing starts have recovered and were at their strongest pace in more than 14 years. Amazing, considering the COVID-related downturn in the spring. There aren’t enough homes in this country to go around, and we need a long-lasting surge of construction to meet demand,” said Holden Lewis, home and mortgage expert at personal-finance website NerdWallet.
The recent surge in demand for new residential homes translates into increased revenue for construction companies in almost every United States area.