New Home Construction Retreats Quickly in December

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Both housing starts and permits were expected to retreat
a bit in December
, following their strong performances in October and November.
Permits did tick down, but housing starts, which were exceptionally strong in
November, gave back in a much bigger way.  

The U.S. Census Bureau and the Department of Housing
and Urban Development said starts were at a seasonally adjusted annual rate of
1,192,000, an 8.2 percent month-over-month decline, and were off by 6.0 percent
from the December 2016 pace.  The
November estimate for housing starts was revised up from 1,297,000 to 1,299,000.

The housing starts number was substantially lower than
analysts had anticipated
.  Those polled
by Econoday had made predictions ranging from 1,230,000 to 1,320,000 units,
with a consensus of 1,280,000.

The performance in the single-family sector was significantly
worse
.  Those starts dropped 11.8 percent
compared to November, to a rate of 836,000 units although they still retained a
3.5 percent edge over the previous December. 
The estimate for November starts was revised from 930,000 to 948,000.
Starts in buildings with five or more units increased from 343,000 to 352,000,
a 2.6 percent gain, and were 21.6 percent lower than the same month in 2016

On a non-adjusted basis there were 80,300 housing
units started in December compared to 98,100 in November.  Single-family starts dropped from 69,300 to
54,300.

The year-end estimate for all of 2017 is a total of
1,202,100 housing starts.  This is an
increase of 2.4 percent compared to the prior year.

Permits for residential construction were issued in
December at a seasonally adjusted rate of 1,302,000 units.  This was 0.1 percent fewer than in November’s
revised (from 1,298,000) rate of 1,303,000 units.  The rate of permitting is running 2.8 percent
above the level in December of last year.

The report’s estimate was only slightly below the consensus
forecast of 1,300,000.  The range was
1,265,000 to 1,330,000 units.

Single family performance was up, with permits issued
at a rate of 881,000.  This is a 1.8 percent
increase from November and 6.1 percent higher than a year earlier.  November’s estimate was revised from 862,000
to 865,000.   The rate of permitting for multi-family units
dropped from 399,000 to 382,000, a decline of 4.3 percent, and is running 3.8
percent behind last year.

On a non-adjusted basis, there were 93,200 permits
issued in December, down from 97,000. There were 56,500 single family permits
issued, compared to 62,000 the previous month.

Approximately 1,263,400 building permits were issued during
2017.  This is 4.7 percent more than the
1,206,600 estimated for 2016.

December saw housing units completed at an annual rate
of 1,177,000 units, a 2.2 percent increase from November’s pace of 1,152,000
which was a revision of the earlier estimate of 1,116,000.  The December rate was up 7.4 percent from a
year earlier. 

Single-family units were completed at a rate of
818,000, an increase of 4.3 percent from the revised rate of 784,000 in November
and 6.9 percent higher than a year earlier. 
Multifamily completions fell 2.0 percent to 346,000 units, but remained
7.1 percent higher year-over-year.

There were an estimated 1,152,000 housing units
completed in all of 2017.  This is an 8.7
percent increase from the 1,059,700 units that were brought on line in 2016.

At the end of the reporting period there were approximately
1,113,000 housing units under construction, 502,000 of which were single-family
houses.  In addition, there were 154,000
permits that had been issued but under which construction had not yet begun. An
estimated 83,000 in the backlog were for single-family construction.

Starts in the Northeast were 4.3 percent lower than in
November and down 1.1 percent year-over-year. Permits rose by 43.0 percent and
24.2 percent respectively for the two periods. Completions were down 22.8
percent for the month but were up 9.8 percent year-over-year.

In the Midwest starts dropped by 24.2 percent compared
to November and were 19.0 percent lower than a year earlier. Permits increased
by 8.7 percent for the month and 6.4 percent year-over-year. Units were
completed at a rate that was down by 5.7 percent from November and by 9.8
percent from December 2016.

The South saw starts decline by 14.2 percent from
December, but they were 2.8 percent above the pace in December 2016. Permits
fell 11.1 percent month-over-month and were down 4.1 percent from the previous
December. The rate of completions dipped 0.2 percent from November but was 4.7
percent higher than a year earlier.

Starts in the West declined by 0.9 percent month-over-month
and 12.0 percent compared to a year earlier. There was an uptick of 1.7 percent
in permitting, putting the December rate 4.9 percent ahead of the prior year. Completions
finished the year strongly, up 30.1 percent and 26.3 percent compared to the
two earlier periods.



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