December Housing Starts: Capping Off the Best Year Since 2007

• December housing starts rose 16.9 percent from November and 40.8 percent from a year ago, to slightly more than 1.6 million (SAAR) — the highest level since December 2006, according to the U.S. Census Bureau.
• Permits fell to 1.4 million (SAAR), down 3.9 percent from November but up 5.8 percent from December 2018.
• Completed homes were up 5.1 percent from November and 19.6 percent from a year ago.

Despite a slow and unsteady start, 2019 will go in the books as a refreshingly strong year for home construction, with housing starts and permits logging their best years since 2007 — an encouraging sign for the industry as 2020 begins. The number of for-sale homes is at its lowest level in more than a decade and December's home construction numbers are evidence that builders are doing what they can to address the shortage. Enduring headwinds in the form of regulatory hurdles, volatile materials’ costs and a shortage of buildable lots were echoed in a slight pullback from November’s 12-year highs, but otherwise it’s clear that builders are reasonably confident that strong demand for housing will persist. And they’re likely right: Would-be buyers continue to be presented with precious few for-sale options, particularly at lower price points — even as economic conditions including low mortgage interest rates and a steady jobs market encourage still more buyers to jump into the pool. It's going to take more than increased construction to completely emerge from the ongoing and historic inventory shortage, but more homebuilding certainly won’t hurt. For now, it appears that builders are game for the challenge.

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