New-home construction posted its largest percentage decrease since April, a big fall after last month’s surge, the Commerce Department reports. Housing starts dropped 9.8 percent in December to a seasonally adjusted annual rate of just under 1 million units.
The drop follows a sharp rise in November, in which new-housing starts had accelerated to the fastest pace since February 2008.
Single-family home construction, which makes up the largest segment of starts, dropped 7 percent in December to a seasonally adjusted annual rate of 667,000 units. However, total single-family housing starts still mark the highest monthly total in 2013, except for November. Multifamily starts fell 14.9 percent for the month.
Regionally, housing starts dropped the most in the Midwest, falling 33.5 percent, which most economists say recent frigid weather likely was to blame.
Housing permits, a sign of future home construction, dropped 3 percent in December, mostly weighed down by a 4.8 percent drop in permits for single-family homes, the Commerce Department reports.
Despite December’s drop, housing starts were up year over year. Housing starts jumped 18.3 percent in 2013 over 2012 data, the Commerce Department reports.
“Last year was a good year for home building,” says David Crowe, National Association of Home Builders’ chief economist. “As pent-up demand is unlocked and the labor market improves, we anticipate that 2014 should be an even better year for home construction. That’s good news for economic growth, as each new home that is built creates three full-time jobs and contributes to the tax base of local communities.”
Source: “U.S. Housing Starts Fall Less Than Expected, Weather May be a Factor,” Reuters (Jan. 17, 2014) and National Association of Home Builders
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