MarketWatch Report: New-home construction activity soars to highest level in over a decade

The U.S. Census Bureau recently reported home builders nationwide started construction on homes at a seasonally-adjusted annual rate of 1.67 million in December 2020, representing a 5.8 percent increase from the previous month’s figure.

Permitting for new homes occurred at a seasonally-adjusted annual rate of 1.71 million, up 4.5 percent from November, according to a Jan. 23 story in MarketWatch. Builders constructed single-family homes at a 12 percent faster pace in December.

Compared with December 2019, housing starts were up 5 percent, while permits were up 17 percent, MarketWatch reported. It was the highest level housing starts and building permits have reached since 2006. Both figures came in above analysts’ expectations, reflecting growth in the single-family sector.

On a regional basis, all parts of the country saw permitting activity increase except for the Northeast, where it fell some 7.2 percent. The Midwest experienced the largest growth in housing starts, with a 32 percent increase.

Overall, housing starts for 2020 were up nearly 12 percent from 2019, in spite of the slowdown this past spring sparked by the pandemic. The demand for new home construction continues to remain high, giving builders “strong incentive to keep building,” Danielle Hale, chief economist for Realtor.com, told MarketWatch.

“New mortgage applications are also rising again, perhaps to get ahead of higher interest rates. Despite slow population growth, residential construction remains well-supported by (so far) record-low mortgage rates, record-lean resale listings, and the migration of teleworkers to the suburbs,” Michael Gregory, deputy chief economist at BMO Capital Markets, wrote in a research note.

“Housing starts have recovered and were at their strongest pace in more than 14 years. Amazing, considering the COVID-related downturn in the spring. There aren’t enough homes in this country to go around, and we need a long-lasting surge of construction to meet demand,” Holden Lewis, home and mortgage expert at personal-finance website NerdWallet, told MarketWatch.

Read the full MarketWatch report, here.