Home builders in the US cut back slightly on new construction in the final month of 2015, though they built the most homes last year since 2007. Housing starts fell 2.5 per cent last month to an annual rate of 1.15 million, the US Commerce Department said Wednesday.
For the full year home builders started work on 1.11 million new houses, the largest number since the Great Recession. Starts climbed nearly 11 per cent compared to 2014.
US Housing Starts
New housing construction in the US tapered off last month in all regions except the Northeast, where starts rose 24.4 per cent.
Requests for new building permits, meanwhile, slipped 3.9 per cent to an annual rate of 1.23 million in December. But the increase in permits was also the strongest in 2015 since the Great Recession. Permits rose 12 per cent in 2015 to an estimated 1.18 million units. Permits reflect how many new homes that companies plan to build in the near future.
US Existing Home Sales
Meanwhile, US home resales rebounded strongly in December from a 19-month low and prices surged, indicating the housing market recovery remained intact despite signs of a sharp deceleration in economic growth in recent months.
The National Association of Realtors said Friday existing home sales jumped a record 14.7 per cent to an annual rate of 5.46 million units, after being temporarily held back by the introduction of new mortgage disclosure rules, which had caused delays in the closing of contracts in November.
November’s sales pace was unrevised at 4.76 million units. Economists had forecast home resales rebounding 8.9 per cent to a 5.20-million rate in December. Sales rose 6.5 per cent to 5.26 million units in 2015, the strongest since 2006.
At December’s sales pace, it would take 3.9 months to clear the stock of houses on the market, the fewest since January 2005, and down from 5.1 months in November. A six-months supply is viewed as a healthy balance between supply and demand.
With inventories still tight, the median house price jumped 7.6 per cent from a year ago to US$224,100. House prices increased 6.7 per cent in 2015. Although higher prices could sideline potential buyers, especially those wanting to purchase a home for the first time, they are boosting equity for homeowners, which could encourage them to put their homes on the market.
US Home Construction Up for 2015
With the December report on housing starts and permits, preliminary totals for 2015 are now available. Total housing starts at 1.11 million were up 10.8 per cent in 2015 compared to 2014, said the National Association of Home Builders Wednesday. Single-family starts were up 10.4 per cent to 715,300 and multifamily starts were up 11.4 per cent to 396,000. All four census regions also experienced increases in single-family starts for 2015. The monthly change for December starts was down 2.5 per cent to 1.15 million and December single-family starts were down 3.3 per cent to 768,000.
Housing permits were up for the year by 12 per cent to 1.18 million with increases in both single-family (up 7.9 per cent) and multifamily (11.4 per cent). December single-family permits were also up from November by 1.8 per cent to 740,000. Total permits, however were down from November to December by 3.9 per cent to 1.232 million.