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US Housing Starts Surge in December, Led by Multifamily Boom – News and Statistics

US Housing Starts Surge in December, Led by Multifamily Boom – News and Statistics

Jan 17, 2025

Housing starts in the United States surged in December, reaching the highest pace since early 2024, driven by a significant increase in multifamily projects and a more measured rise in single-family homes. (Source), Bloomberg reported that new residential construction jumped nearly 16% to an annualized rate of 1.50 million, marking a recovery after three months of downturn. The impressive figures surpassed all predictions from a Bloomberg survey of economists.

According to IndexBox platform data, single-family starts rose by 3.3% to an annualized rate of 1.05 million, the strongest showing since February 2024. Multifamily project construction, including apartment buildings, soared almost 62%, the most significant surge since 2011. Despite this robust monthly growth, overall new home construction for 2024 was the slowest since 2019, impacted by mortgage rates that remained above 6% throughout the year and have recently climbed above 7%, exacerbating the affordability challenges caused by previous record-high prices.

To attract buyers, contractors have offered sales incentives such as mortgage rate buydowns, where they cover upfront payments to lower customers’ interest expenses. However, the housing market faces persistent challenges with rising customer cancellations and an uncertain outlook. Builder confidence for the next six months dipped this month, the first decline since June.

Building permits, which indicate future construction activity, edged down 0.7% to a 1.48 million annual rate, primarily due to a decrease in permits for multifamily housing. In contrast, authorizations for single-family homes increased at the fastest pace since February. As developers adjust to softened demand while holding a substantial unsold inventory, the number of homes under construction has been on a downward trend over the past year and reached the lowest level since August 2021 last month. Completion rates have also continued to slow, hitting the lowest mark since March.

Regionally, housing starts climbed in three of four areas across the US, highlighted by an 18% increase in the South, the country’s largest homebuilding region. The report highlighted the inherent volatility in new residential construction data, with the government noting a 90% confidence interval that the monthly change ranged between a 1.4% and 30.2% gain.

Source: IndexBox Market Intelligence Platform