Housing Starts Surge in December

WASHINGTON D.C. - The Commerce Department reported Wednesday that housing starts shot up 10.9 percent last month, the biggest jump in more than seven years as groundbreaking activity increased across the nation.

Housing starts rose to a seasonally adjusted annual rate of 2.004 million units in December, from a 1.807 million pace in November. It was the largest gain since an 11.2 percent rise in September 1997.

Single-family housing starts in December were at a rate of 1.678 million, a 13.1 percent increase over the November figure. The December estimate for units in buildings with five units of more was 291,000.

For the full year, housing starts rose 5.7 percent to a 1.953 million rate, the slowest pace since 2001.

?EUR??,,????'??Home building in December was absolutely solid, finishing up the year nicely after some softening in November that was related to bad weather,?EUR??,,????'?? said David Seiders, chief economist of NAHB. ?EUR??,,????'??The level of unused building permits moved up last month, and that is a favorable sign for starts activity as we move forward this year.?EUR??,,????'?? He added that builders polled in this month's NAHB/Wells Fargo Housing Market Index (HMI) expressed a high degree of optimism about housing market conditions currently and over the next six months.

Privately-owned housing completions in December were at a seasonally adjusted annual rate of 1.946 million. This is 12.5 percent above the revised November estimate of 1.730 million and is 12.1 percent above the December 2003 rate of 1.736 million.

Single-family housing completions for the month were at a rate of 1.673 million units, 15.7 percent above November's figure of 1.446 million. The December rate for units in buildings with five units or more was 252,000.

Low mortgage lending rates, which averaged 5.8 percent in 2004 according to mortgage market giant Freddie Mac, have been supporting the housing sector despite short-term interest rate increases by the Fed.

Permits for future groundbreaking, an indicator of builder confidence, fell 0.3 percent to 2.021 million units. Single-family authorizations in December were at a rate of 1.558 million, a 0.6 percent rise over November. Authorizations of units in buildings with five units or more were at a rate of 367,000 in December.