January 30, 2012
Nation's Building News

The Official Online Newspaper of NAHB

Economics and Finance
Single-Family Housing Starts Rise in December for Third Straight Month

Nationwide production of new single-family homes rose 4.4% to a seasonally adjusted annual rate of 470,000 units in December, according to figures released by the U.S. Commerce Department on Jan. 19.

This was the third consecutive monthly increase for single-family housing starts, bringing them to their fastest pace since April of 2010.

However, a 20.4% dip on the more volatile multifamily side to 187,000 units slowed overall housing starts in December by 4.1% — to a 657,000-unit rate.

"The December report adds to the growing evidence that demand for new, single-family homes is finally starting to firm up in an increasing number of markets nationwide," said NAHB Chairman Bob Nielsen.

"This emerging trend is allowing builders to put more crews back to work, and could be even stronger if not for the overly tight credit conditions that prevail for both builders and buyers, as well as the continuing foreclosure crisis and the challenges of obtaining accurate appraisal values on new homes,” Nielsen said.

“Policymakers should be doing everything possible to alleviate these problems and nurture the fledgling housing recovery in order to promote job and economic growth," he added.

"This report is in keeping with our expectations for slow but steady improvement in the single-family market, where production hit its lowest yearly rate in more than 50 years in 2011," said NAHB Chief Economist David Crowe.

"Meanwhile, it should be noted that the decline in multifamily starts in December was coming off a dramatic increase from the previous month and simply brought that sector back closer to trend, he said.

“Apartment production generally has been gaining strength heading into 2012 after posting a gain of more than 50% in 2011,” he said. “Looking forward, NAHB is forecasting gains of approximately 17% in total housing production in 2012."   

Overall housing production in 2011 totaled 606,900 units in the Commerce Department’s initial estimate, which was a 3.4% improvement over starts in 2010.

Regionally, December housing starts rose 54.8% in the Midwest following a big decline in the previous month.

The Northeast posted a 41.2% decline that offset a big gain in the previous month, while the South and West posted declines of 3.0% and 17.6%, respectively.

Permit issuance, which can be an indicator of future building activity, held virtually flat at a 679,000-unit rate in December.

Single-family permits rose for a third consecutive month — by 1.8% to 444,000 units — while multifamily permits declined 3.7% to 235,000 units.

Regionally, permits in December rose 5.8% in the Midwest, held unchanged in the West and declined 6.5% in the Northeast and 0.6% in the South.

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