WASHINGTON — The U.S. December housing data were disappointing, stalling at a high level and perhaps reflecting the effects of bad weather and slightly higher interest rates. Still, the level beat the median estimate in the MNI News poll of economist and is consistent with housing recovery.
December housing starts posted a 9.8% decline to 999,000 and permits fell 3.0% to 986,000. These remain above the 744,000 completions level and are probably very close to the pace of household formations, suggesting that housing coming on-line will continue to add to real growth.
The drop in starts was across types, with 1-family starts down 7.0%. But the decline centered in the Midwest at a 33.5% decrease and South at a 12.3% drop — which could reflect the bad weather.
Starts in the West posted a 15.0% gain and were flat in the Northeast as multi-construction continued.
The permits drop was in 1-families at a 4.8% decline and 5-plus units at a 0.6% slide. The 2-4 units were up 8.3%. This probably reflects the effects of higher mortgage rates and brings starts and permits into good alignment, suggesting no surge ahead in construction. The middle category probably remains strong because owning a few rental units in one's primary residence remains a positive investment.
For all of 2013, starts totaled 923,000, up 18.3% over the year, showing that housing has recovered. This level of starts was the highest since 1.355 million in 2007, prior to the housing market-induced economic meltdown.
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