The US Census released residential construction data last week, and it showed that housing starts or the breaking of ground for new construction was up 5.8% in the month of December. This came in much stronger than its estimate of +0.8%. When looking at the annual change, housing starts were up 5.2%. Digging deeper, single family housing starts were up a whopping 12% in December and a large 28% year over year.
More of the report reflected that housing permits were also up. In December, they rose 4.5% and 17.3% year over year. Single family permits were up 8% last month and up a very large 30% year over year. Last but not least, household completions also increased. Completions are simply the completion of a home construction project. For the month of December, completions rose by 15.9% and are up 8.0% year over year.
It is evident that builders are trying hard to meet the demand of home buyers as there is certainly a shortage of existing homes. Supply of existing homes is more than 20% lower than where it was this time last year. New construction is without a doubt going to help the tight inventory problem.