In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s second update discusses housing starts.
- Among this morning’s news releases was a positive surprise on home construction in December.
- The Census bureau reported 954,000 starts in December, an increase of 12.1% from November which was revised modestly lower.
- Single family construction, which has lagged for several years in the wake of the subprime crisis and subsequent bloat in inventory, was up 18.5% over the 12-month period ending in December.
- Permits for construction of single family units were 27.3% higher over this period, suggesting confidence among builders for the future.
- Despite the strong figures, starts remain well below the historic average and should not pose a threat to inventories as much of the building is done in niche markets. Furthermore, financing for construction has been tight in recent years, so new projects are vetted closely by builders and lenders who search out good local information. Builder confidence in local conditions is a positive indicator for inventories, sales volumes, and price trends in these markets.
- New construction adds to GDP and employment growth.