WASHINGTON (AP) — U.S. home construction slowed in December but ended 2013 with the best showing since
the housing bubble burst.
The
Commerce Department said Friday that builders broke ground last month
at a seasonally annual rate of 999,000. That’s 9.8 percent lower than
November’s pace of 1.12 million, which was the fastest in five years.
For
the year, builders started 923,000 homes and apartments, up 18.3
percent from 2012. It was the fourth straight annual gain and the
strongest since 2007, when 1.36 million homes were started.
The
housing market has been recovering steadily over the past year, helping
to boost economic growth and create jobs. But a rise in mortgage rates
from record lows reached a year ago have started to weigh on those
gains.
Still, economists said they December’s dip in activity
followed a huge gain November. They also blamed some of the decline last
month on cold weather, which may have disrupted some construction
activity.
"Despite really bad weather, builders still managed to
keep digging and that is a great indication that the housing market
continues to move forward," said Joel Naroff, chief economist at Naroff
Economic Advisors.
For December, construction of single-family
homes, which makes up roughly two-thirds of homebuilding, fell 7 percent
to an annual rate of 667,000. Construction of apartments, which can be
more volatile, dropped 14.9 percent to a 332,000 rate.
Applications
for building permits, considered a good sign of future activity, fell 3
percent in December to a rate of 986,000. Single-family permits fell
4.8 percent. Permits for apartments were unchanged.
Construction
activity in December fell 33.5 percent in the Midwest and 12.3 percent
in the South. Construction rose 15 percent in the West and was unchanged
in the Northeast.
Mortgage rates are roughly a percentage point
higher than in the spring. Still, they remain low by historical
standards. The average rate on a 30-year mortgage fell to 4.41 percent
this week. That’s down from a peak of 4.6 percent in August.
U.S. homebuilders remain generally upbeat ahead of the spring home-buying season.
The
National Association of Home Builders/Wells Fargo builder sentiment
index slipped to 56 in January, down slightly from a 57 reading in
December. Readings above 50 indicate more builders view sales conditions
as good rather than poor. Even with the small dip, the overall index
remains in positive territory and is nine points higher than it was a
year ago.
The spring buying and selling season kicks off next
month, traditionally the time of the year that sets the tone for
residential hiring and construction. Many builders, particularly smaller
firms, sell homes that will take months to build.
Though new
homes represent only a fraction of the housing market, they have an
outsize impact on the economy. Each home built creates an average of
three jobs for a year and generates about $90,000 in tax revenue,
according to data from the homebuilders association.
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