Although housing starts may have declined slightly in December, they remain at roughly (a seasonally adjusted annual rate of) 1 million units. Not only is this relatively strong compared to the recent history, it means that new homes are feeding into the beginning of the production pipeline faster than they’re leaving at the other end (as completions have fluctuated within a fairly broad but lower band of roughly 700,000 to 830,000).
As a result, the number of new homes under construction increased for the 28th consecutive month in December, from a seasonally adjusted 688,000 to 707,000—breaking above the 700,000 barrier for first time since March of 2009.
As reported last month, the growth continues to come from both single-family and multifamily construction. In December, the number of single-family homes being built increased for the 23rd time in the 24 months—from 331,000 to 339,000. Meanwhile, the number of apartments under construction increased for the 32nd time in 33 months—from 357,000 to 368,000.
One of the reasons the rate of completions is lagging starts and causing the number of homes under construction to swell is that, after a prolonged downturn, it’s difficult to attract factors of production back into the market. Over the past year, shortages have popped up in the markets for certain building materials, developed lots, and skilled labor. A current example is the high share of unfilled job openings in the construction sector reported by the Bureau of Labor Statistics.