Builders broke ground on more homes than forecast in December as a jump in apartment construction helped cap the seventh straight yearly increase, a report from the Commerce Department showed Thursday.
Starts rose 11.3% to a 1.23 million annualized rate (the forecast was 1.19 million) from a revised 1.1 million pace. Permits, a proxy for future construction, decreased 0.2% to a 1.21 million annualized rate (the forecast was 1.23 million). Single-family starts declined 4% to 795,000, while multifamily construction jumped 57.3% to 431,000.
Residential construction ended the year on a stronger note, a sign the industry will continue to be in a steady recovery. Even with a recent pickup in mortgage rates, borrowing costs remain attractive for those who qualify for a mortgage, and the job market is still solid.
While faster growth in construction is impeded by a shortage of skilled workers and available ready-to-build lots, builder confidence is close to an 11-year high on optimism President-elect Donald Trump and the new Congress will ease regulations.
Permits for single-family homes rose 4.7% in December and multifamily permits declined 9%. Starts rose from the prior month in three of four U.S. regions, led by the Midwest; construction in the South declined.
For all of 2016, there were 1.17 million starts, up from 1.11 million in the prior year and the most since 2007.