New residential construction in the U.S. increased by far more than expected in the month of December, the Commerce Department revealed in a report on Thursday, with housing starts jumping to a four-and-a-half-year high.
The Commerce Department said housing starts surged up 12.1 percent to a seasonally adjusted annual rate of 954,000 in December from the revised November estimate of 851,000. The increase lifted housing starts to their highest annual rate since June of 2008.
Economists had expected housing starts to climb to an annual rate of 887,000 from the 861,000 originally reported for the previous month.
Chris Low, chief economist at FTN Financial, said, "Housing starts finished the year on a strong note as reconstruction in the Northeast and warmer-than-usual weather in the Midwest and West resulted in unseasonably strong activity."
The Commerce Department said an estimated 780,000 housing units were started in 2012, up 28.1 percent compared to 608,800 in 2011.
The monthly increase in December was partly due to an 8.1 percent increase in single-family housing starts, which rose to an annual rate of 616,000.
The rate for units in buildings with five units or more was 330,000 in December, up 23.1 percent from the previous month.
The report also showed significant increases in housing starts in the Midwest and the Northeast, where starts jumped by 24.7 percent and 21.4 percent, respectively.
Housing starts in the West also showed a notable increase, rising by 18.7 percent, while housing starts in the South increased by a more modest 3.8 percent.
Building permits, an indicator of future housing demand, edged up by 0.3 percent to an annual rate of 903,000 in December from the revised November rate of 900,000.
Economists had expected building permits to climb to 910,000 from the 899,000 originally reported for the previous month.
The Commerce Department said an estimated 813,400 housing units were authorized by building permits in 2012, up 30.3 percent compared to 624,100 in 2011.
On Wednesday, the National Association of Home Builders released a report showing that homebuilder confidence held steady in January following eight consecutive monthly gains.
The report showed that the NAHB/Wells Fargo Housing Market Index came in at 47 in January, unchanged from December. Economist had expected the index to inch up to 48.
While the housing market index ended its recent winning streak, the NAHB noted that the index remains at its highest level since April of 2006.
by RTT Staff Writer
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