Housing Production Ends the Year Strong

Housing starts in December were at a seasonally adjusted annual rate of 999,000, according to estimates from the Census Bureau and Department of Housing and Urban Development. In addition, the November level was revised up by 1.5% to a 1,107,000 annualized rate. As a result, the December reading was 9.8% below this revised November estimate, but 1.6% above the pace of housing starts recorded in December 2012.


Despite the month-over-month decline, housing production ended the year in a relatively strong fashion. The annualized rate of housing starts recorded in December exceeded the level recorded for all of 2013, 923,000, by 8.2%. The December recording of total housing starts was also the third highest level in 2013 behind the 1.1 million starts recorded in November and 1 million starts registered in March.

Moreover, on a 3-month moving average basis, one method used to identify an underlying trend, housing starts rose by 4.4% in December, eclipsing 1million for the first time in 2013. The 3-month moving average of total housing starts last exceeded 1million in June 2008.

The Census estimates for 2013 demonstrate it was a positive one for home building. Total housing starts are estimated to come in at 923,000, 18% higher than 2012. Multifamily starts are estimated to total 306,000, a nearly 25% jump over 2012. And single-family starts grew 15% over 2012 to 618,000.

Going forward, housing starts should continue to show progress as pent-up demand is unlocked and the labor market improves.  The NAHB/Wells Fargo Housing Market Index is consistent with this forecast, coming in a level of 56 in January – the eighth consecutive month above the key level of 50.