New home construction accelerated to its fastest pace since 2006, far outpacing analyst expectations and providing further evidence that the suburban housing market is undergoing to historic boom.
U.S. home builders broke ground on new homes at a seasonally-adjusted annual rate of 1.67 million in December, a 5.8 percent increase from the previous month’s figure, the U.S. Census Bureau reported Thursday. That easily beat the median estimate of analysts and topped even the most bullish forecasts.
Starts of single-family homes jumped 12 percent to a 1.34 million pace, also the fastest pace since 2006 and the biggest month-over-month gain since June. Single-family home starts have risen for 8 consecutive months, the longest-lasting construction boom in 50 years.
Compared with a year ago, single-family starts are up an eye-popping 28 percent. That jump highlights just how extreme and sudden the shift in demand for housing has been over the past year. The market was caught largely unprepared for the surge in demand for single-family homes with more space for remote working and learning and less exposure to cities plagued with rising violence, budget shortfalls, and leftwing movements aimed at curbing policing.
Multifamily starts, which include apartment buildings and are concentrated in cities, fell to 331,000, an indication that demand for housing coming from buyers looking to exit cities in an age of pandemic, social distancing, closed amenities, shuttered schools, remote working, and rising urban violence.
Permitting for new home construction, an indicator of future home building, rose to a seasonally-adjusted annual rate of 1.71 million, up 4.5 percent from November.
New homes make up just around 12 percent of the U.S. housing market but they punch above their weight-class in terms of economic activity because building homes is labor intensive—and requires workers with a wide range of skill levels and expertise—and new homes get outfitted with new furniture, new appliances, and often even new cars and trucks.