December housing starts and permits capped off a resurgent 2019 for the housing market, blowing away expectations with results not seen since 2006.
Starts came in at 1,608,000, 16.9% above the consensus 1,375,000 number. This is the highest level since December of 2006. Single family starts led the charge again, with 1,055,000, the first time they have crossed the million mark since July of 2007. The volatile multi-family segment came in at 536,000, 32% higher than last month and a whopping 75% higher than December of 2019.
Permits also showed continued strength, coming in at 1,416,000, almost 4% higher than last month and almost 6% higher than last year.
For the full year, permits came in at 1,368,800, 3.9% higher than 2018, while starts totaled 1,289,800, 3.2% higher than 2018. While the year over year increases are not nearly as impressive as the December results, it is important to note that the bulk of the year over year increase largely occurred between August and December, highlighting the momentum the market has seen since the end of summer. With mortgage rates continuing to be favorable for buyers, along with strength in jobs and wages, the momentum should continue into early 2020. Headwinds remain in the form of the cost of land, labor and materials, however the results for starts and permits over the past several months indicate the industry is finding a way to combat these headwinds. Further, the recent signing of the U.S.-Mexico-Canada Agreement on trade could provide a bit of a boost to builders in the form of lower input costs given many of their supplies are imported from Mexico and Canada, such as lumber.