Housing starts post best year since 2007
New residential construction in the U.S. rose more than forecast in December, capping the best year since 2007 and signaling the industry will probably keep expanding this year.
Housing starts increased 4.4%to a 1.09 annual rate, following the prior month’s 1.04 million pace that was higher than previously estimated, a Commerce Department report showed Wednesday in Washington. The median forecast of 82 economists surveyed by Bloomberg was 1.04 million. The advance was driven by single-family projects, which climbed to an almost seven-year high.
An improving labor market, mortgage costs close to multi- year lows and rising consumer confidence will probably sustain demand for residential real-estate. Faster wage gains and easier credit would help spur the housing recovery, benefiting sales and profits at builders such as Lennar Corp.
“The strength is where you’d like to see it, in single- family housing,” said Brian Jones, a senior U.S. economist at Societe Generale in New York, who had forecast starts would rise to 1.07 million. “It bodes well for residential real estate. It’s another thing going in the right direction for the economy.”
Stock-index futures held earlier losses after the report. The contract on the Standard & Poor’s 500 Index maturing in March dropped 0.2%to 2,012.3 at 8:46 a.m. in New York.
Estimates in the Bloomberg survey of economists ranged from 950,000 to 1.1 million. The prior month’s reading was previously reported as a 1.03 million pace.
Permits, a proxy for future construction, declined 1.9%in December to a 1.03 million pace. It was depressed by a setback in multifamily projects, which are often volatile from month to month. Applications for single-family homes increased to a seven-year high.
Builders began work on 1.01 million houses in 2014, the most since 2007. The boom peaked at a three-decade high of 2.07 million in 2005, before plunging to a record-low 554,000 in 2009.
Construction of single-family homes climbed 7.2%to a 728,000 rate, the most since March 2008, from 679,000 the previous month.
Work on multi-family homes, such as townhouses and apartment buildings, decreased 0.8%to an annual rate of 361,000.