Housing Starts Down 11.2% in December; Post Yearly Gain

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Housing starts fell 11.2% in December to a seasonally adjusted annual rate of 1.08 million units, according to a report from the U.S. Department of Housing and Urban Development and the Commerce Department that was delayed due to the partial government shutdown. Multifamily starts fell 20.4% to a seasonally adjusted annual rate of 320,000 units while single-family production posted a 6.7% decline to 758,000 units. However, single-family and multifamily starts each posted a yearly gain. Single-family production was up 2.8% in 2018 to a rate of 872,800, the highest annual figure since the Great Recession. Multifamily starts posted a 5.5% gain in 2018 to 373,700 units. "Looking back, the December drop in housing production correlated with the peak increase in mortgage rates and corresponding decline in builder sentiment," said NAHB Chairman Greg Ugalde. "During that time, builders adopted a cautious wait-and-see approach as demonstrated in the rise of single-family and multifamily units that were permitted but not under construction." "Looking ahead, we expect single-family production will be relatively flat in 2019 and multifamily starts will level off as well," said NAHB Chief Economist Robert Dietz. "The biggest challenge facing builders this year will be ongoing housing affordability concerns as they continue to grapple with a shortage of construction workers, a lack of buildable lots and excessive regulatory burdens." Overall permits—which are an indicator of future housing production—inched up 0.3% in December to a seasonally adjusted annual rate of 1.33 million. Single-family permits fell 2.2% to an 829,000 unit pace in December while multifamily permits increased 4.9% to an annualized rate of 497,000. For 2018, single-family permits posted a 4% gain of 852,700 over the previous year while multifamily permits edged down 0.9% to 458,000. Regionally in December, combined single-family and multifamily housing starts were unchanged in the Northeast. Starts fell 26.3% in the West, 13.2% in the Midwest and 6% in the South. Overall permit issuance in December rose 17.1% in the West. Permits were down 6% in the Northeast, 17.6% in the Midwest and 2% in the South.  

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