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Housing Starts Jump to Highest Rate Since 2008

Builders broke ground on new homes at a yearly rate of 954,000 in December, a 12.1 percent jump over November and the highest rate since July 2008, the ""Census Bureau and HUD"":http://www.census.gov/construction/nrc/pdf/newresconst_201212.pdf reported jointly Thursday. Applications for residential permits rose a modest 0.3 percent, and residential completions rose 1.6 percent.

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Rebuilding in the wake of superstorm Sandy contributed to the increase in total starts as activity in the Northeast jumped to a pace of 85,000 from 70,000 in November.

The increase in starts--driven by a surge multi-family activity--was the strongest gain measured by number of units (103,000) since May 2006.

Economists had expected start activity to increase to a rate of 887,000. Permit applications, reported at 903,000, fell short of the forecast of 910,000. The report of November starts was revised downward to 851,000 from the originally reported 861,000--making the December increase larger--while the report of November permits was increased to 900,000 from the originally reported 899,000.

Single-family starts rose in December to a rate of 616,000, the strongest pace since June 2008. Single-family start activity for November was revised to 570,000 from the originally reported 565,000. According to the data, multi-family starts rose in December to a pace of 330,000 from November's revised 268,000. The month-over-month increase in multi-family activity was the strongest since November 2011.

Multi-family starts accounted for 35.4 percent of total starts, the largest share since June 2008.

The data backs up the steady increase in builder confidence reflected in the monthly Housing Market Index compiled by the National Association of Home Builders. Although the index ""reported Wednesday"":http://www.themreport.com/articles/builder-confidence-stalls-in-january-2013-01-16 for January was flat to December, it had risen before that for eight straight months.

According to the Census/HUD report, builders completed 535,000 single family homes in December, the strongest since June 2010, when builders rushed to complete work on homes so buyers could take advantage of the federal home buyer tax credit program. According to the latest government report on new home sales, completions are far outpacing sales activity, however. New homes sales for November, the latest data available, totaled 377,000.

The report on permit and start activity is good news for the beleaguered construction industry. According to the Bureau of Labor Statistics, ""there are 11.5 unemployed construction workers"":http://www.themreport.com/articles/123-workers-for-every-open-construction-job-in-nov-2013-01-10 for every available construction job.

The report is also good news for the residential investment component of gross domestic product for the fourth quarter: Starts in the quarter were up 16.1 percent from the third quarter, three times the growth from the second to the third quarter.

Total starts rose in all four census regions, improving 39,000 in the Midwest to 197,000; 32,000 in the West to 203,000; 17,000 in the South to 469,000; and 15,000 in the Northeast to 85,000.

Single-family starts rose 31,000 in the South to 328,000; 11,000 in the Midwest to 108,000; 4,000 in the Northeast to 51,000; and were flat in the West at 129,000.

Total permits rose month-over-month in the Northeast and West while falling in the Midwest and South. Single-family permits rose in the Northeast and Midwest while falling in the South and West.

_Hear Mark Lieberman every Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:40 a.m. and again at 9:40 Eastern time._

About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.
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