Today, the U.S. Census Bureau reported that there were 1,226,000 housing starts recorded for December. Some small revisions were made to the previous months’ reports. The slow and steady rise of U.S. housing start continues.
Privately-owned housing starts in December were at a seasonally adjusted annual rate of 1,226,000. This is 11.3 percent (±10.4%) above the revised November rate of 1,102,000 and is 5.7 percent (±12.0%)* above the December 2015 rate of 1,160,000.
Multifamily construction made up 56% of the starts, but remember these number are prone to revision. Overall, the trend is still for growth even though that growth may seem slow. My recurring theme on housing starts in this cycle is that we will not see aggressive growth in this sector but will continue to see some growth compared to the last years when we had the lowest number of starts ever, in U.S. history .
From Calculated Risk
While we may be at cycle highs this is because we are comparing to historically low numbers. Perspective always is the buzz kill guest at a good party.
The slow growth in housing starts kills any notion that we are in over investment cycle like we were during the housing bubble. Housing as a contributor to the economy has been choppy to be kind.
Single family starts ended the year with a 9.3% gain while multifamily starts showed a negative print of 3%. Without the help of the multifamily boom, total starts were lower than some had hoped in 2016 but we are still seeing growth were it counts and that is in single family construction. We will need to wait for our massive youth demographic to come of home-ownership age before we see more accelerated growth in this sector. This should happen in 2020-2024.
Note: I will be speaking at the California Association of Realtors conference in Indian Wells, CA on Jan 27th. Joining me will be economist Dr. John Husing to speak on the topic of the U.S. housing market and the U.S. economy under President Donald Trump. Leslie Appleton Young will be moderating. It should be a great discussion.
Logan Mohtashami is a financial writer and blogger covering the U.S. economy with a specialization in the housing market. Logan Mohtashami is a senior loan officer at AMC Lending Group, which has been providing mortgage services for California residents since 1987. Logan also tracks all economic data daily on his own facebook page https://www.facebook.com/Logan.Mohtashami