Housing is on the march. That is certainly the logical conclusion, and perhaps the only conclusion, that can be drawn following a report, within the past hour, of a strong upsurge in housing starts in December.
Specifically, new building jumped to a seasonally adjusted annual rate of 954,000 units last month. That was 12.1% above the revised November estimate of 851,000 homes started (earlier, the November tally had been estimated at 861,000 homes). In addition, the most recent figure was nearly 37% higher than the December, 2011 estimated annual level of 697,000 homes. For comparison purposes, though, the figure was still more than 30% below the average level of housing starts over the past 50 years. Thus, while housing is definitely on the mend, it still has further to go. For the most recent year, as a whole, an estimated 780,000 housing units were started. That was up 28% from the comparable 2011 full-year estimate.
In addition to starts, privately owned housing units authorized by building permits came in at a seasonally adjusted annual rate of 903,000 homes in December. That metric, too, was up, albeit nominally, from the estimated 900,000 permits issued in November. Here, as well, the year-to-year swing in the latest month was dramatic, albeit not quite as formidable as the gain from the year before in starts. The increase in permits was 28%.
Meanwhile, in a rare bit of uniformity, starts were up in every region of the country in December. Specifically, building was higher by 21.4% in the Northeast, where building had earlier been limited by the ravages from Hurricane Sandy. Moreover, starts jumped by 24.7% in the Midwest, by 3.8% in the South (the largest region of the country), and by 18.7% in the West (the second largest area by volume in the nation).
Taken as a whole, there was little not to like in this report, which was materially better than forecast, and should set this sector up for a stellar 2013. The housing data may not be a game changer at this point, but the December increase in building gives us some confidence that the nation's gross domestic product, which earlier seemed as though it might increase by just 1.0% to 1.5% in the recently concluded fourth quarter, could well have gained 1.5%, with the risks to the upside.