Housing Construction Ends Year on a High Note

Building permit authorizations, a predictor of future construction, were at a SAAR of 1,416,000 in December. Permits fell 3.9 percent from November’s revised rate, but were up 5.8 percent year-over-year.

Permit authorizations fell 0.5 percent for single-family housing and 11.1 percent for construction of homes of five units or more. Authorizations declined 15.7 percent in the Northeast and 6.5 percent in the South. Starts in the Midwest inched up 0.5 percent and gained 3.8 percent in the West.

In 2019, an estimated 1,289,800 housing units were started, up 3.2 percent from 2018. Building permit authorizations increased 3.9 percent to 1,368,800.

“The year ended on a high note with solid gains in single-family and multifamily production,” said Danushka Nanayakkara-Skillington, NAHB’s Assistant Vice President of Forecasting and Analysis. “And while the December estimates will likely be revised down, the trend moving forward is still positive.”

Builders are expecting a vigorous market for residential construction in 2020. The last two NAHB/Wells Fargo Housing Market Indices posted readings at the highest sentiment levels since July 1999.

“The solid housing production numbers are in line with strong builder sentiment, supported by a low supply of existing homes, low mortgage rates and a strong labor market,” said NAHB Chairman Greg Ugalde. “Low interest rates and a healthy labor market combined with a need for additional inventory are setting the stage for further home building gains in 2020.”