U.S. housing starts rise strongly above expectations in December

Housing starts in the U.S. rose strongly in December. On a sequential basis, the housing starts grew 16.9 percent to 1.608 million units in the month from an upwardly revised 1.375 million units in the prior month. Consensus expectations were for a rise of just 1.1 percent.

The rise was widespread, with both single and multi-family starts rising in the month. Single-family starts rose just 11.2 percent to 1.055 million units, while the more volatile multi-family segment recorded an even larger 29.8 percent rise to 553k.

Meanwhile, permits dropped 3.9 percent in December to 1.416 million. Multi-family permits fell 9.6 percent, following a modest rise of 0.5 percent in the prior month, while single-family permits dropped marginally by 0.5 percent.

The regional outturn was decidedly on the positive side, with the Midwest the most pronounced. This was followed by rises in the Northeast, the West and the South.

“The strong reading suggests that residential activity has some momentum heading in the New Year, supported by low mortgage rates, a solid labor market and an optimistic outlook among builders, whose confidence posted the highest back-to-back reading in December and January since 1999”, said TD Economics in a research report.