U.S. home construction jumped 5.8% in December to 1.67 million units, a 14-year high that topped the strongest annual showing from the country’s builders in 15 years.
The better-than-expected December gain followed an increase of 9.8% in November when housing starts climbed to a seasonally adjusted annual rate of 1.58 million units, the Commerce Department reported Thursday. The December pace was the strongest since the building rate reached 1.72 million units in September 2006.
For the year, construction began on 1.45 million units, up 4.8% from 2019 and the best pace since construction starts totaled 1.8 million units in 2006. That period included a massive U.S. housing boom that eventually burst, kicking off the catastrophic 2007-2009 recession.
Housing has been one of the star performers this year even as the overall economy has been wracked by the spread of the coronavirus. Record-low mortgage rates and the migration of Americans to larger homes better suited for home offices during the pandemic has fueled demand.
“We expect the pace of housing starts to moderate in 2021 as homebuilders confront constraints including high lumber prices and shortages of lots and labor,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.
Even with these constraints, Vanden Houten believes home construction should remain at healthy levels, supported by low mortgage rates and strong demand when COVID-19 cases begin to decline.
For December, construction of single-family homes increased by 7.8% to 1.23 million units. Construction of apartments with five or more units fell by 2% to a rate of 437,000.
The Northeast was the only region in the country that fell, suffering a decline of 7.2%. Construction rose 13.6% in the Midwest, 11.2% in the West and 1.3% in the South.