Economic Snapshot: Housing starts at six-year high

Could this be a sign of recovery for housing starts in 2015? We will have to see, as November 2013’s housing starts indicated strong growth for the following year and housing starts in 2014 never reached above November 2013’s reading, according to Bill McBride of the Calculated Risk blog.

Still, while one month of data shouldn’t impact our outlook too strongly, this month’s report is certainly strong. And though the housing market index dipped a bit this month, builders continue to view sales conditions more favorably than not. 

Housing starts

Housing starts in December were at an annual rate of 1,089,000, 4.4 percent above the revised estimate of 1,043,000 in November and 5.3 percent above the December 2013 rate of 1,034,000. Housing starts are now at the highest level in over six years.

An estimated 1,005,800 housing units were started in 2014, 8.8 percent above the 2013 figure of 924,900.

Single-family house starts were at a rate of 728,000 this month, 7.2 percent above the previous month’s rate of 679,000 and up 4.9 percent year-over-year. Single-family housing starts are at the highest level since March 2008.

Privately-owned housing units authorized by building permits in December were at an annual rate of 1,032,000, 1,9 percent below the November rate of 1,052,000 but 1.0 percent above December 2013’s estimate of 1,022,000.

Housing completions were at an annual rate of 927,000, 6.3 percent above the revised November estimate of 872,000 and 19.6 percent above the December 2013 rate of 775,000.

Housing market index

The National Association of Home Builders reported the housing market index was at 57 in January, down from 58 in December but up from 56 in January 2014. This is the seventh consecutive month of reports above 50, which indicates more builders view sales conditions as good than poor.

Single-family homes remained flat at 62. The gauge of single-family sales expectations for the next six months fell from 64 to 60 and the index for prospective buyer traffic dipped from 46 to 44.

Regional HMI dropped to 43 in the Northeast, down from 46 in December but up from 40 in the previous year. The West also fell from 74 to 65 and the South dipped from 58 to 55. However, in the Midwest, HMI rose from 54 to 60.

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