WASHINGTON: U.S. homebuilding surged to a 13-year high in December as activity increased across the board, suggesting the housing market recovery was back on track amid low mortgage rates, and could help support the longest economic expansion on record.
Housing starts jumped 16.9per cent to a seasonally adjusted annual rate of 1.608 million units last month, the highest level since December 2006. The percentage gain was the largest since October 2016. Groundbreaking activity last month was likely flattered by unseasonably mild weather and probably overstates the health of the housing market.
Housing starts soared 40.8per cent on a year-on-year basis in December. An estimated 1.290 million housing units were started in 2019, up 3.2per cent compared to 2018. The housing market is regaining momentum after the Federal Reserve cut interest rates three times last year, pushing down mortgage rates from last year's multi-year highs. The 30-year fixed mortgage rate has dropped to an average of 3.65per cent from its peak of 4.94per cent in November 2018, according to data from mortgage finance agency Freddie Mac.
In a separate report on Friday, the Fed said manufacturing production rose 0.2per cent last month, adding to November's 1.0per cent increase. Manufacturing output, however, fell 1.0per cent in the fourth quarter. It dropped 0.2per cent in 2019, the first decline since 2016. Groundbreaking activity could, however, slow in the coming months as building fell 3.9per cent to a rate of 1.416 million units in December after hitting the highest level in more than 12-1/2 years in November. An estimated 1.369 million building permits were authorized in 2019.
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