Housing Starts, Permits Slow in December

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The rate of housing permit filings in December EDGED DOWN 0.1 percent to a seasonally adjusted annual rate (SAAR) of 1.302 million units;
  • The rate of permits for single-family home starts in December INCREASED 1.8 percent to an SAAR of 881,000 units, highest level since August 2007 (916.000)
  • The rate of permits for multi-family homes FELL 3.9 percent in December to 421,000 units (SAAR);
  • The rate of all housing starts DROPPED 8.2 percent in December to an SAAR of 1.192 million;
  • Single-family starts FELL 11.8 percent to an SAAR of 836,000 while multi-family starts IMPROVED 1.4 percent to an SAAR of 356,000;
  • The rate of home completions in December INCREASED 2.2 percent from November; Single-family completions GREW 4.3 percent while multi-family homes declined

Trends:

  • The pace of all permits has dropped for three of the last four months but is still 2.8 percent ahead of 2016;
  • Single-family permits were up for the fourth straight months; multi-family permits were down for the third time in the last four months;
  • The rate of housing starts has fallen month-month eight times in 2017 and the December pace was off 6.1 percent from December 2016;
  • Virtually all the decline in housing starts was due to a fall in the pace of single-family starts which was down 11.8 percent in December;
  • The SAAR of home completions rose in December for only the second time in the last six months.

Data Source: Census Bureau / Department of Housing and Urban Development

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The slowdown in housing activity in December calls into question the strong endorsement of the Republican tax law changes which over time are likely to have a negative impact on the nation’s housing market.

The caps on the home mortgage interest deduction and local property tax deduction should, if basic economic laws haven’t also been changed, increase the net cost of homeownership which will bring values and prices down.

Home building was already under some price pressures in the wake of rebuilding following fall hurricanes which raised the prices of building materials and labor.  While builders could recapture those higher costs with higher prices, the tax law changes might undercut those efforts.

Hear Mark Lieberman every Friday at 6:20 am on POTUS Morning Briefing, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

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