WASHINGTON (AP) — US builders started fewer homes in December, but prior gains meant that residential construction ended 2015 at its healthiest level in eight years.
Housing starts dipped 2.5 percent last month to a seasonally adjusted annual rate of 1.15 million homes, the Commerce Department said Wednesday. This marks some giveback after starts climbed 10.1 percent in November, in addition to the drag caused by flooding across parts of the South and Midwest that likely slowed construction.
“Looking beyond monthly performance, U.S. homebuilders continued to make gradual progress in 2015,” said Ksenia Bushmeneva, an economist at TD Bank. “This modest but positive momentum is expected to continue this year, as robust job creation, improved household formations and still-low interest rates continue to support demand for housing.”
Last year marked the strongest performance for home construction since 2007, right when the housing bubble triggered the start of the Great Recession. But the construction figures show rapid changes in how Americans live as apartments have become more popular among builders.
Over the course of 2015, ground breakings climbed 10.8 percent to 1.1 million. But multifamily complexes were 34.6 percent of all starts last year, compared to just 20.5 percent in 2007.
The change reflects a dwindling share of home ownership. That figure now rests at 63.7 percent, down from a high of 69.2 percent in 2000.
During the more than six year recovery from the recession, many existing homeowners chose to remodel their home instead of upgrading to a new property.
Permits for new construction are still running at roughly half their 2005 peak. But permits for remodeling have fully recovered, according to an index of activity compiled by BuildZoom, an online marketplace for contractors, and the Urban Economics Laboratory of the Center for Real Estate at Massachusetts Institute of Technology.
Remodeling activity has fallen 1.7 percent from a year ago as new construction has picked up, according to an update of the index released this month.
But remodeling has surged in some of the priciest markets where housing costs have climbed. The index reported a 29.4 percent jump in San Jose, California and a 5.9 percent increase in San Francisco.
The Commerce Department said future plans to build also slowed last month.
Building permits fell 2.9 percent in December to an annual rate of 1.23 million. Still, permits rose a robust 12 percent over the past 12 months.
December housing starts declined in the Midwest, South, and West, but the warmer than usual month likely bolstered construction in the Northeast, which rose 24.7 percent from the previous month.
Many construction firms continue to be optimistic, according to an industry report released Tuesday.
The National Association of Home Builders/Wells Fargo builder sentiment index stood at 60 in January, roughly its same level for the past several months. Readings above 50 indicate more builders view sales conditions as good, rather than poor.